The update below has been provided by our affiliated Financial Planning firm, Barns Financial Services www.barnsfinancial.com.au
Yesterday the Federal Government announced significant changes to the proposed superannuation reforms that were introduced in the May 2016 Budget.
The news that the retrospective $500,000 lifetime non concessional contribution limit has been removed is a sensible decision that we have been advocating the government for, since the May Budget.
Below are the key proposals:
- The $500,000 lifetime Non Concessional Contributions (NCC) Cap has been dropped.
- The Government has instead announced a reduction of the current annual NCC Cap from $180,000 to $100,000 from 1 July 2017.
- This will mean that you can continue to contribute NCCs of up to $180,000, and use the bring forward rules to allow $540,000 this financial year. The 3-year bring forward provisions will remain as per the current provisions based on the lower cap.
- No NCC contributions will be allowed once your superannuation balance reaches $1,600,000.
- The reduction to a $25,000 Concessional Contribution Cap will remain in place and commence from 1 July 2017.
- The concessional contribution catch up provisions have been delayed and will now not commence until the 2019/2020 financial year.
- The Government has confirmed that Division 293 (i.e. the extra 15% contributions tax on Super) will be reduced to individuals with salaries above $250,000 p.a.
- The government has changed their mind on the removal of the work test for those aged over 65.Therefore if you wish to contribute to superannuation over the age of 65, then you must be working at least 40 hours in a 30 day period.