Super reforms on the way

The changes made to Australia’s superannuation system announced in the 2016 Federal Budget will take effect from 1 July 2017. 

The reforms have significantly changed the landscape for retirement savings, affecting both pre-retirees and retirees. Below is an overview of the new rules coming into play from 1 July 2017 onwards: 

$1.6 million transfer balance cap 

The introduction of a $1.6 million cap on the total amount that can be transferred into the tax-free retirement phase for account-based pensions. Those who currently hold more than $1.6 million in pension phase will need to reduce their balance prior to 1 July 2017. 

Lowering of the concessional and non-concessional contribution caps 

The cap on concessional (before-tax) contributions will be decreased from $30,000 (for those under the age of 50) or $35,000 (for those aged 50 years old and over) to the flat rate of $25,000 per year for all age groups. 

The new annual cap for non-concessional (after-tax) contributions will be reduced from $180,000 to $100,000. This will remain available to individuals between 65 and 74 years old if they meet the work test. Individuals under the age of 65 will be able to bring-forward three years of contributions, i.e. $300,000. 

Changes to transition to retirement income streams (TRIS) 

Currently, where a member receives a TRIS, the fund receives tax-free earnings on the super assets that support it. The Government will remove the tax-exempt status of earnings from assets that support a TRIS. Earnings from assets supporting a TRIS will be taxed at 15 per cent regardless of the date the TRIS commenced. Members will also no longer be able to treat super income stream payments as lump sums for taxation purposes. 

Spouse tax offset 

The spouse’s income threshold will be increased to $40,000 from 1 July 2017. The current 18 per cent tax offset of up to $540 will remain as is and will be available for any individual, whether married or de facto, contributing to a recipient spouse whose income is up to $37,000. The offset is gradually reduced for income above this level and completely phases out at income above $40,000. 

Confused by the new legislative changes?

Contact our Superannuation Fund specialist, Daniel Uden, at our office on 02 6938 4600 to help you assess how these changes may affect your superannuation and retirement plans.

Cristy Houghton

Embarketing, 48 Johnston Street, Wagga Wagga, NSW, 2650

Cristy's unique career has taken her from country NSW to the city lights of Clarendon Street South Melbourne and back again. With an early career in radio as a copywriter and creative strategist, she is now a Jill of all trades as a graphic designer, website builder, blog writer, video editor, social media manager, marketing strategist and more. 

In fact, give her any task and this chick will figure out how to do it! Go on, we dare you!

No, really, we DARE you!!

Cristy has won two Australian Commercial Radio Awards (ACRAs) for Best Ad and Best Sales Promotion, and even has an 'Employee of the Year' certificate with her name on it.

Cristy and her husband James have traveled extensively through Russia, China and South East Asia, and have two fur-babies, Sooty (cat) and Panda (puppy). Cristy loves drinking coffee, meeting people to drink coffee, coffee tasting and coffee flavoured cocktails. She also enjoys road trips, TED Talks and watching cat videos on youtube.