As you will have heard superannuation reform bills have now been passed by both houses and await royal assent – here’s what you need to know:
Unless stated otherwise, the following changes are effective from 1 July 2017:
- Reduction in the non-concessional cap to $100,000 p.a (bring forward reduced to $300,000 for those eligible). Individuals with a super balance of more than $1.6m will no longer be eligible to make non-concessional contributions from 1 July 2017. This limit will be indexed and tied to the pension cap of $1.6m
- Introduction of the $1.6M pension cap. The effect is that member’s will be able to have up to $1.6M in pension phase where the investment income is not taxed. Any superannuation balance over this amount will have its earnings taxed at 15%
- There are transitional CGT relief rules that will be able to be used where a member in pension phase has a current balance greater than $1.6M. The key impact of this is the ability to restate the cost price of assets to their market value as at 1 July 2017
- Reduction of concessional contributions to $25,000 for all members eligible to contribute
- Removal of the tax exemption applied to Transition to Retirement Income
- Catch up concessional contribution measures to come into place from 1 July 2018
- Lowering of the income tax threshold where contributions are taxed at 30% from $300,000 to $250,000
- The requirement to be able to claim a deduction for personal superannuation contribution will no longer require earning less than 10% of your income from employment.
What happens now?
With the majority of these changes coming into effect in seven months’ time, Bentleys NSW is viewing this as a window of opportunity, whereby implementing the correct super strategies now will maximise your retirement goals.
Get professional advice to consider your exact circumstances.
If you would like more information on how the changes may affect you please call us on 02 9220 0700.