SMSF

CONCESSIONAL CONTRIBUTION CAP REDUCED TO $25,000

Effective 1 July 2017

Annual cap on concessional contributions will reduce to $25,000 for all taxpayers regardless of age.

AgeAnnual cap amount
In 2015/16 and 2016/17From 2017/18
48 or under on 30 June 2015$30,000$25,000
49 or over on 30 June 2015$35,000$25,000

For individuals with a superannuation balance less than $500,000, unused concessional contribution cap amounts will be able to be carried forward on a rolling basis over 5 consecutive years. This applies to unused cap amounts from 1 July 2017.

 

LIFETIME CAP FOR NON CONCESSIONAL CONTRIBUTIONS

A lifetime non concessional contributions cap of $500,000 will be introduced effective Budget night, 7.30pm on 3 May 2016.

The $500,000 lifetime cap will take into account all non-concessional contributions made on or after 1 July 2007. Contributions made before Budget night cannot result in an excess of the lifetime cap, however those who have exceeded the cap prior to Budget night will be taken to have used their lifetime cap.

These new rules will replace the existing annual non concessional cap of up $180,000 per year (or $540,000 every 3 years under the bring forward rule for individuals aged under 65)

 

REMOVE CONTRIBUTION ELIGIBILITY REQUIREMENTS FOR THOSE AGED 65 TO 74

Effective 1 July 2017

The current work test that applies for people making contributions between aged 65 and 74 will be removed.

 

PENSION LIMITS

Effective 1 July 2017

A transfer balance cap will be introduced to restrict the amount of a member’s superannuation balance that can be transferred to pension phase to $1.6 million. Any balance over this amount must remain in accumulation phase where earnings will be taxed at 15%.

 Members already in pension phase at 1 July 2017 with balances in excess of $1.6 million will need to either:

  • transfer the excess back into accumulation or
  • withdraw the excess from their superannuation fund

ADDITIONAL 15% CONRIBUTIONS TAX – THRESHOLD REDUCES TO $250,000

Effective 1 July 2017

Division 293 tax, which is an additional 15% contributions tax payable by high income earners with income exceeding $300,000, will apply to those with income exceeding $250,000.

IncomeTax on concessional contributions
In 2015/16 and 2016/17From 2017/18
<$250,00015%15%
$250,000 to $300,00015%30%
$300,000 +30%30%

 

TRANSITION TO RETIREMENT PENSIONS – REMOVAL OF EARNINGS TAX EXEMPTION

 Effective 1 July 2017

The tax exempt status of income from assets supporting transition to retirement (TTR) income streams will be removed from 1 July 2017. Earnings will then be taxed at 15%. No grandfathering provisions have been applied therefore this change will apply irrespective of when the TTR income stream commenced.

 

LOW INCOME SUPERANNUATION TAX OFFSET

 Effective 1 July 2017

 A Low Income Superannuation Tax Offset (LISTO) will be introduced to reduce tax on superannuation contributions for low income earners.

The LISTO will provide a non-refundable tax offset to superannuation funds, based on the tax paid on concessional contributions up to a cap of $500. The LISTO will apply to members with adjusted taxable income up to $37,000 that have had a concessional contribution made on their behalf.

 

EXTEND DEDUCTIONS FOR PERSONAL CONTRIBUTIONS

Effective 1 July 2017

Australians under 75 will be able to claim an income tax deduction for any personal superannuation contributions made to a complying superannuation fund up to their concessional cap. This effectively allows all individuals, regardless of their employment circumstances, to claim a deduction for their personal contributions up to the value of the concessional cap

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