Changes to super – are you 1 July 2017 ready
The federal government is making changes to super from 1 July 2017. This could mean you'll pay more tax, leaving less money for you in retirement.
Key areas affected by the changes are:
- before-tax (concessional) contributions, e.g. salary sacrifice and employer contributions
- after-tax (non-concessional) contributions, e.g. personal contributions you make, and
- tax treatment of transition to retirement (TTR) accounts.
Act now to get ready for 1 July
Complete our quick questionnaire to help us identify how you could save on tax and grow your retirement savings. It'll only take a few minutes.
If you'd prefer to speak to us about how these changes may affect you, call 1300 130 780. We're here to help.
Changes to super from 1 July 2017
Concessional contributions cap
The annual concessional contributions cap will be reduced to $25,000 for all members. This cap will be indexed in line with wages growth.
You can utilise unused concessional contributions cap amounts from up to five previous years if, just before the start of the financial year, you have a total super balance of less than $500,000.
The first year in which you can access unused concessional contributions is the 2019/20 financial year.
Non-concessional contributions cap
The annual non-concessional contributions cap will be reduced from $180,000 to $100,000. This will be available to members between 65 and 74 if they meet the work test (that is, if they work 40 hours within a 30-day period each financial year).
If your super balance is greater than $1.6 million, you cannot make non-concessional contributions nor will you be able to receive the government co-contribution.
The current three-year bring-forward rule for members under 65 will still apply. The maximum non-concessional amount you can add in one year is $300,000. If you contribute this amount in one year, you cannot make further non-concessional contributions for the next two financial years. For those with greater than $1.3 million, your bring-forward will be limited based on the $1.6 million cap.
Transition to retirement pension (TTR)
Tax exemption on earnings from a TTR pension will no longer apply. Earnings will be taxed at 15%, regardless of when the TTR pension commenced. TTR pensions are no longer considered a retirement-phase income stream.
Removal of anti-detriment payments
We can no longer include anti-detriment payments as part of the death benefit if a member dies on or after 1 July 2017.
Anti-detriment payments may be claimed if a member dies on or before 30 June 2017. The benefit must be paid on or before 30 June 2019.
Low Income Super Tax Offset Contribution (LISTO)
This government refund replaces the Low Income Superannuation Contribution (LISC). Capped at $500, the LISTO is paid into your LUCRF Super account and is calculated on the tax you've paid on your total concessional (before-tax) super contributions. You must earn $37,000 or less per year to be eligible.
Tax deductibility for personal super contributions
You'll be able to make personal contributions to your super and claim a full tax deduction for the contribution. This will suit members who aren't offered a salary sacrifice arrangement with their employer and want to make additional pre-tax contributions.
This is subject to the concessional contributions cap.
To claim the tax deduction, you'll need to make a lump sum contribution to your LUCRF Super account and submit a Notice of Intent to Claim a Tax Deduction form. We'll deduct contribution tax, and then you can claim a full deduction in your tax return for the amount contributed. This will also be available to members between 65 and 74 if they meet the work test (that is, if they work 40 hours within a 30-day period each financial year).
Changes to the spouse tax offset
Eligibility for the spouse tax offset has been extended to members whose spouse earns under $40,000 per year. If your spouse earns under $37,000 per year you'll now be eligible for an 18% tax offset of up to $540 on spouse contributions. This is an increase from the existing $10,800-per-year threshold. This offset will phase out for spouses earning over $40,000 per year.
Reduction of the income threshold for Division 293 tax
The threshold at which high-income earners pay additional tax on their concessionally taxed contributions will be $250,000 (down from $300,000).
Transfer balance cap into a LUCRF Pension account
There'll be a $1.6 million cap on the total super savings which can be transferred into a LUCRF Pension account. Amounts above the $1.6 million cap will need to be transferred back into a super account or be withdrawn.