Proposed 2016 budget changes to superannuation
With year-end fast approaching and people consider contributing funds into superannuation it is important to consider the changes that have been proposed in the 2016 budget. Whist the changes are only proposed and subject to amendment it is important that you consider them as there is little political opposition to them and therefore likely that they will be implemented.
The Government has announced a number of changes in the 2016-17 Budget. The Budget papers are available at budget.gov.au
Subject to being passed in Parliament most of the changes are scheduled to commence on 1 July 2017, and a number will have an impact on members of superannuation funds. The major changes include:
- Introducing a $1.6 million superannuation transfer balance cap on the total amount of superannuation that an individual can transfer into retirement phase accounts.
- Requiring those with combined incomes and superannuation contributions greater than $250,000 to pay 30 per cent tax on their concessional contributions, up from 15 per cent. This extends the current treatment of people with combined incomes and superannuation contributions over $300,000.
- Lowering the superannuation concessional contributions cap to $25,000 per annum. See Fact Sheet.
- Subject to being passed in Parliament introducing a $500,000 lifetime cap for non-concessional (after tax non-deductible) contributions, the budget papers indicate that this will be backdated to 2007 hence people who have been contributing in prior years may have already reached this amount.
- A number of similar changes will apply to defined benefit superannuation arrangements.
- Removing the tax exemption on earnings of assets supporting Transition to Retirement Income Streams from 1 July 2017 (income streams of individuals over preservation age but not retired). This removes the tax incentive for most individuals between the age of 56 and 59 to be in a TTR arrangement.