Update on budget measures | Superannuation reform changes through Parliament

The Federal Budget measure of establishing a $500,000 lifetime non-concessional cap back-dated to 2007 is to be scrapped.

Instead, the annual non-concessional contribution cap will be reduced from $180,000pa to $100,000pa. This change is set to commence from 1st July 2017.

Individuals under the age of 65 will continue to be able to use the ‘averaging provisions’ whereby 3 years of non-concessional contributions may be made via a lump sum.

From July next year this will be reduced to an effective maximum of $300,000.

Importantly, superannuants with a balance of more than $1.6 million in their fund after 1st July 2017 will no longer be eligible to make any non-concessional contributions from that date.

What does this mean for you?

There may be a window of opportunity for people wanting to make non-concessional contributions to their super fund prior to the changes coming into force.

These include:

If you are under the age of 65 and have not triggered the averaging provisions, you may make a non concessional contribution of up to $540,000 prior to 30th June 2017.
If you have triggered the averaging provisions in 2014/15 or later, you may make a contribution of the difference between $540,000 and your total non concessional contributions since 1st July 2014.
If you are between the ages of 65 and 75 and still working (or able to meet the ‘work test’), you may contribute up to $180,000 prior to 30th June 2017.

Please contact our office if you require any assistance in relation to your own superannuation planning.

Lex Goldsmith | Principal Edge Financial Services | Senior Planning Analyst

16 September 2016