The Federal Government’s superannuation reform measures have now been implemented. Here is a summary of the changes that you should be aware of.
1. Pre-tax Super contributions
The pre-tax superannuation contributions (also known as concessional contributions) cap is now $25,000 pa irrespective of age. These contributions are taxed at 15% unless your income is greater than $250,000 pa, when contributions are taxed at 30%.
2. Post-tax Super contributions
The post-tax superannuation contributions (also known as non-concessional contributions) cap is now $100,000 pa. If you are under 65 at any time during the income year, you can still ‘bring forward’ two future years of contributions at the revised limit of $300,000.
However, if your total superannuation balances across all super funds exceeds $1.6M, you will not be able to make any post-tax contributions.
3. The $1.6 million pension cap – Transfer Balance Cap
There is now a $1.6m individual limit on the amount of super you can transfer and hold in a tax-free retirement pension account. If you pension balance is in excess of $1.6m post 1 July 2017, you may have to excess transfer balance tax and will be required to reduce your balance. There remains no restriction on how much you can continue to hold in accumulation phase.
4. Transition to Retirement Income Streams (TRIS)
The Government has now removed the tax-exempt state of earnings from assets that support Transition to Retirement Income Streams that are in retirement phase. Earnings from assets supporting non-retirement phase TRIS accounts will be taxed at 15% regardless of the commencement date of the pension.
5. Spouse Contributions
Those who pay money into superannuation for a low income earning spouse can get back up to $540 from the Government through a tax rebate. The eligibility threshold for the spouse’s income has increased from $13,800 pa to $40,000 p.a. from 1 July.
Do you need help with your Super?
Speak to a DPM Private Wealth Consultant who can identify whether you are impacted by these superannuation changes and work with you to develop a financial plan to manage your superannuation going forward.
Disclaimer: * The information contained in this site is general and is not intended to serve as advice as your personal circumstances have not been considered. DPM Financial Services Group recommends you obtain personal advice concerning specific matters before making a decision.