There are number of changes in the May 2016 Budget affecting superannuation:
- The Division 293 contributions tax threshold has been reduced from $300k to $250k from 1 July 2017. This is the point at which 30% is paid on concessional contributions instead of 15%.
- Concessional contribution will be capped at $25,000 for everyone from 1 July 2017.
- The tax exemption on earning of assets supporting Transition-to- retirement Income Streams will be removed from 1 July 2017. These are the superannuation pensions paid to members who are over preservation age but are not retired.
- A lifetime cap of $500k for non-concessional contributions has been introduced and will apply from budget night. It will include all non-concessional contributions made since 1 July 2007. This replaces the existing $180k annual cap. Contributions made before budget night cannot result in an excess.
- The work test and spouse limits for those aged under 75 years have been removed from 1 July 2017.
- Individuals can make catch up concessional contributions where their super balance is less than $500k and where they have not reached their concessional cap in previous years. This will start from 1 July 2017.
- All employees can deduct personal superannuation contributions from 1 July 2017.
- A low income superannuation tax offset is to be introduced from 1 July 2017 for super funds based on the tax paid on concessional contributions made on behalf of low income earners up to a cap of $500.
- A cap of $1.6m has been introduced to the amount that can be transferred to an account based pension from 1 July 2017. Subsequent earnings on these balances will not be restricted. Where an individual has more than $1.6m in their fund this will be maintained in an accumulation phase account and taxed at 15%.