Since the Federal Budget on 3 May 2016, many superannuation strategies have carried a significant element of uncertainty.
As you may have heard, the Government has announced some significant changes to the superannuation proposals previously announced on Budget night. It’s important to be aware that we still don’t have any legislation released on these measures, which is essential in determining how the new measures will truly operate.
The Government has indicated that legislation is expected to be introduced into Parliament before the end of 2016.
The following important changes have been announced:
- The proposed lifetime cap of $500,000 per person for non-concessional contributions will not go ahead.
- From 1 July 2017, those with a superannuation account balance below $1.6 million will be able to make non-concessional contributions.
- If you are eligible to make non-concessional contributions from 1 July 2017, they will be limited to $100,000 per annum (or $300,000 over three years using existing bring-forward rules).
- The Government will retain the existing requirement that you must meet a work test to be able to contribute to super between ages 65 and 74 (they had originally proposed to remove this requirement).
- There are no changes to the proposals around concessional contributions (including lowering the limit to $25,000) other than delaying the “catch-up” opportunity for those with less than $500,000 in super by 12 months to a 1 July 2018 commencement.
Some of these changes may result in the opportunity to make additional contributions to super, particularly before the new proposals take effect on 1 July 2017. However, in the absence of legislation to give effect to these measures, we recommend you seek advice before acting.