Proposed changes to Superannuation
Proposed changes to superannuation affecting all Australians were announced in the May 2016 Federal Budget. These amendments are yet to be legislated and are likely to come before parliament before the end of the year. These amendments will potentially come into effect from 1 July 2017 however many affect current legislation and care needs to be taken in exercising currently allowable contributions. The proposals thus far are as follows:
Legislate the objective of superannuation as “Providing income in retirement to substitute or supplement the age pension”.
The present low income super contribution will be retained in the form of a low income super tax offset (rebate).
A $1.6mil cap is to be placed on the amount of your super that can be transferred into a tax free retirement account.
The annual cap on tax deductible superannuation contributions is to be reduced to $25,000 for all members and a catch up process introduced allowing unused caps over 5 years to be made for balances of $500,000 or less.
Increasing the tax on contributions from 15% to 30% for those whose income is above a salary threshold of $250,000 p.a.
Allow personal contributions up to $25,000 p.a. for anyone under 75 to allow self-employed persons and retirees to continue to build their retirement savings.
Extending eligibility for the tax offset (rebate) for low income spouse contributions.
Concessionally taxing, at 15%, the earnings on assets supporting transition to retirement pensions.
The government has also announced amendments to their original proposals including paring back tax breaks on super contributions by lowering the annual non-concessional contributions cap from $180,000 to $100,000 and abandoning the proposed lifetime $500,000 non-concessional contributions cap. The opposition has indicated broad support for the Government’s proposed superannuation package, including strong support for legislating the objective of super and supporting a low income earner super contribution similar to the proposed tax offset. Which of these proposals will get through and become law? How will they affect you? Keep watching our page to find out!