Counting down to the new wave of super changes
In May, the Australian Government announced a number of changes to superannuation. It’s now confirmed these changes will be legislated, taking effect from 1 July 2017. Let’s look at the key changes, and how they might affect you.
I’ve listed a summary of the key reforms, below. (The changes are listed in full on the ATO website.)
- From 1 July 2017, the government will introduce a $1.6 million cap on the total amount that can be transferred into the tax-free retirement phase for account-based pensions.
- From 1 July 2017, the government will reduce the annual non-concessional (after tax) contribution cap from $180,000 to $100,000 per year. This will remain available to individuals between 65 and 74 years old if they meet the work test.
- There is capacity to bring forward one or two years of non-concessional contributions ($200,000 cap over two years or $300,000 cap over three years) if an individual is under 65 years old.
- From 1 July 2018, individuals will be able to make ‘carry-forward’ concessional super contributions if they have a total superannuation balance of less than $500,000.
- From 1 July 2017, the government will lower the annual concessional contributions cap to $25,000 for all individuals. The cap will index in line with wages growth.
- Currently, the anti-detriment provision enables a fund to claim a deduction in their tax return for a top-up payment made as part of a death benefit payment where the beneficiary is the dependent of the person. The top-up amount represents a refund of a member’s lifetime super contribution tax payments into an estate. From 1 July 2017, the government is removing this provision and super funds will no longer be able to claim this deduction. This change will ensure consistent treatment of lump sum death benefits across all super funds.
If you require information on how these changes could affect you, we encourage you to consult your accountant or financial planner, as appropriate.
Scott Phillips joined Montgomery Investment Management in 2013. Scott joined the firm from BlackRock Investment Management, where he was Managing Director, Head of Retail Australia for 12 years.
This post was contributed by a representative of Montgomery Investment Management Pty Limited (AFSL No. 354564). The principal purpose of this post is to provide factual information and not provide financial product advice. Additionally, the information provided is not intended to provide any recommendation or opinion about any financial product. Any commentary and statements of opinion however may contain general advice only that is prepared without taking into account your personal objectives, financial circumstances or needs. Because of this, before acting on any of the information provided, you should always consider its appropriateness in light of your personal objectives, financial circumstances and needs and should consider seeking independent advice from a financial advisor if necessary before making any decisions. This post specifically excludes personal advice.
