The superannuation changes coming into effect on 1 July 2017 are the most significant in a decade.
We have summarised the main changes that may affect you.
The key changes are:
- $100,000 annual cap on non-concessional contributions
- Concessional contributions limit for everyone reduced to $25,000
- Non-concessional contributions restricted to those with less than $1.6m in superannuation
- Amounts held in pension accounts will be limited to $1.6m
- Investment earnings of transition to retirement pensions to be taxed at 15%, the same as super accumulation accounts.
Three things to do now:
- Maximise concessional contributions before July 1, 2017
From 01 July the maximum amount of contributions will be $25,000. Currently you can put in $30,000 if under 50 or $35,000 if over 50. Take advantage of the higher amounts and put the maximum contributions amount in this year.
- Maximise non-concessional contributions before July 1, 2017
The cap for 2016-17 is $180,000. For people under age 65 (at July 1, 2016), they can bring forward a further two years contributions, totalling up to $540,000 before June 30, 2017.
From July 1, 2017, the non-concessional (after-tax) contribution cap will reduce to $100,000, with a maximum of $300,000 being able to be contributed under the three year bring-forward rule. As well, the ability to make non-concessional contributions will be limited to those with less than $1.6m in superannuation.
- Review Pensions before June 30, 2017
The $1.6m limit on the amount held in the retirement (pension) phase is retrospective. That is, it applies to existing pensions as well as those established in future.
This means that the excess over $1.6m will need to be retained in an accumulation account where the investment earnings are taxed at 15%. Alternatively, all or a part of the excess may be withdrawn from super.
If you need any more information feel to contact us.