This week the Government announced significant changes to the proposed superannuation reforms, providing clarity and certainty for clients around Superannuation.
The big news is that the retrospective $500,000 lifetime non-concessional cap has been removed, which was one of the more controversial measures introduced in the budget. It seems like the package is being put could be acceptable to the opposition and should pass through the senate.
Below are the key proposals:
- The $500K lifetime Non Concessional Contributions (NCC) Cap has been dropped.
- The Government has instead announced a reduction of the current annual NCC Cap from $180K to $100K from 1 July 2017. This will mean clients can continue to contribute NCCs of up to $180K, or use the bring forward provisions to contribute up to $540K this financial year. The 3-year bring forward provisions will remain as per the current provisions based on the lower cap i.e. up to $300K in a financial year. No NCC contributions will be allowed once the proposed $1.6m transfer cap has been reached.
- The reduction to a $25K concessional cap will remain in place and commence from 1 July 2017.
- The concessional contribution catch up provisions have been delayed and will now not commence until the 2019/2020 financial year, which is a disappointment.
- The Government has confirmed that Division 293 tax on Super will be reduced to individuals with salaries above $250,000 p.a.
- The government has also changed its mind on the removal of the work test for those aged over 65, which would have been a welcome change but is now gone.
Most of the changes come into force on 1 July 2017 and we will be keenly awaiting the passing of the legislation to see the detail behind the measure and move forward with certainty.
Rob Gilmour is the Managing Principal of Wealth Simplicity. The information provided should not be considered personal financial advice as it is intended to provide general advice only. The content has been prepared without taking into account your personal objectives, financial situations or needs. You should seek personal financial advice before making any financial or investment decisions.