In October 2016 the Government released proposed reforms to superannuation legislation and regulations. If and once legislated, most measures will take effect from 1 July 2017.
Key changes to superannuation include the following:
- Introduction of a $1.6 million superannuation transfer balance cap
There will be a $1.6 million transfer balance cap on the total amount of accumulated superannuation an individual can transfer into the tax-free retirement phase. Savings beyond this point can remain in an accumulation account where earnings are taxed at 15 per cent, or may be removed from superannuation.
- Reduction of concessional superannuation contributions
The Government will reduce the annual cap on concessional superannuation contributions to $25,000. Concessional superannuation contributions are currently $30,000 for people under the age of 50 and $35,000 for people over the age of 50.
- Introduction of the Low Income Superannuation Tax Offset (LISTO)
The LISTO effectively refunds the tax paid on concessional contributions by individuals with a taxable income of under $37,000. This will avoid situations where a low income earner pays more tax on contributions to superannuation than on their take home pay.
- Allowing catch-up concessional contributions
From 1 July 2018, the Government will help people catch-up their superannuation contributions by allowing individuals with account balances of $500,000 or less to rollover unused concessional caps for up 5 years. This means that if a person does not make any concessional superannuation contributions in 2018-19, in 2019-20 they will be able to contribute $50,000 ($25,000 for 2018-19 and $25,000 for 2019-20).
For a full overview of the proposed changes to superannuation, please do not hesitate to contact Cosgriff Lawyers.