The Government announced a number of changes to super as part of the 2016/17 Federal Budget. Treasurer Scott Morrison said the objective of the changes is to have a more equitable system and to encourage Australians to save for retirement and not be dependent on the Age Pension.
Some of the announcements include:
• A $1.6 million superannuation transfer balance cap will be introduced on the total amount of superannuation that an individual can transfer from an accumulation account to a retirement account.
• Those with combined incomes and superannuation contributions greater than $250,000 will pay 30 per cent tax on their concessional contributions, up from 15 per cent.
• The concessional (before-tax) contributions cap will be lowered to $25,000 per year. However, individuals with balances less than $500,000 will be provided five years to make “catch up contributions”.
• A $500,000 lifetime cap for non-concessional (after-tax) contributions will be introduced with immediate effect.
• A new Low Income Superannuation Tax Offset (LISTO) will replace the Low Income Superannuation Contribution (LISC).
• Changes are also proposed to the taxation arrangements for transition to retirement income streams.
• Individuals aged from 65 to 74 years of age no longer needs to be working to be able to make contributions to their super.
It is important to note that with the exception of the new $500,000 lifetime limit on concessional contributions, most of the measures announced will come into effect from 1 July 2017. It is planned for some of these measures to have retrospective application.
The Government states that 96 per cent of Australians with super would be unaffected or better off as a result of the changes announced.
If you have any concerns about how the budget may affect you, or would like to discuss your finances further, contact our partners at Intrust Super who offer a free financial advice consultation.
Contact Intrust Super on 132 467 to book your free consultation.