The new Super Rules have been passed by both houses of Parliament and are just waiting on Royal Assent - generally this is a mere formality.
The key measures which have a commencement date of 1 July 2017 include:
- The concessional contributions cap is reduced to $25,000. This can be made as employer or personal tax deductible contributions (or a mix of both)
- The non-concessional contribution cap is reduced to $100,000 pa (or $300,000 under the bring forward provisions). While you are also prohibited from making further non-concessional contributions where a member’s total superannuation balance is more than $1.6 million.
- Continuation of the low income superannuation tax offset for member’s whose income level is less than $37,000
- Eligibility for spouse contribution rebates are extended, by increasing the annual income threshold to $37,000
- Lowering the income threshold for Division 293 tax to $250,000
- Abolishing the anti-detriment payment
- Introducing a $1.6 million ‘transfer balance cap’ – the limit of the amount that can be transferred to the pension phase, where earnings are tax-free. This $1.6 million cap applies also the death benefit income streams and defined benefit income streams
- Transition to Retirement Income Streams will no longer be eligible for income tax concessions (at the superannuation fund level)
- The new concessional contributions catch-up regime, providing your total super balances are less than $500,000 commences from 1 July 2018.
The government is yet to release the regulations to this new legislation and we suggest our clients should wait to see this detail before rushing to make decisions about their superannuation balances.
For specialised advice on any of the above please contact Carolyn Peters on 02 9977 8077