Superannuation has been a strong focus in this year's Federal Budget and given the incredible amount of media and political scrutiny taking place in the lead up to the election, our Financial Services team have concentrated on key strategies that may benefit you.
Key superannuation changes covered:
- Reduction in Concessional contribution cap
- Lifetime Non-concessional contribution cap
- Superannuation Pension transfer balance cap
- Tax on Earnings for Transition to retirement pensions
- Reduction in Division 293 tax threshold
Nexia Top 3 Superannuation Changes
1. Catch-up concessional superannuation contributions
What is the proposal?
Individuals will be able to make additional pre-tax contributions if:
- they have not reached the contributions caps in prior years – for example, because they have been out of the workforce while caring for their children
- they have a superannuation balance of less than $500,000.
What does this mean for you?
This is an equity measure, especially targeted at women – people who have been out of the workforce can access the same superannuation benefits as those that were in the workforce. However, note that a catch-up contribution cannot be made any later than 5 years after the year of the undercontribution.
Applies from 1 July 2017
2. Harmonising contribution rules for those aged 65 to 74
What is the proposal?
The work test will be abolished for people over 65 years and under 75 years.
What does this mean for you?
Individuals under 75 will be able to receive contributions from their spouse even if they have not worked during the income year.
Applies from 1 July 2017
3. Improve superannuation balances for low income spouses
What is the proposal?
The Government will increase the capacity for spouses to make contributions to each other’s superannuation funds by lifting the income threshold for the receiving spouse from $10,800 to $37,000.
What does this mean for you?
If an individual is a high income earner with a stay-at-home or low income spouse, they can make after tax contributions to their spouse’s superannuation fund.
Applies from 1 July 2017
Register to access more information on superannuations changes and potential strategies.
