Superannuation has been a strong focus of this year’s Federal Budget.  

A raft of changes have been announced - some which will impact on the ability of Australians to save for their retirement, while other measures will provide incentives and opportunities for lower income earners to bolster their superannuation savings.  

The following measures were announced as part of the Government’s superannuation reform package to improve the sustainability, flexibility and integrity of the super system.

Before we go into detail here is a bird’s eye view of the contribution changes.

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If you are setting up an SMSF or a Trust with a Corporate Trustee our price from 12th September 2016 will be bundled and reduced. Very soon you will be able to order the two in one form including a free ABN application form (www.abr.gov.au form will be pre-filled with your data - saving you time).

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Free Technical Webinar

1 of 3 Part Series : Planning for Death in a SMSF

"Issues to consider" 

Superannuation is increasingly becoming a contentious area for estate litigation and death is perhaps the only constant in one’s life. But despite this, not enough attention is focused on planning for death.

Click below to watch in breif on what will be discussed in the webinar.

This webinar is the first  of a three part series on Death Planning. In this introductory webinar, we will discuss mainly-

- What are death benefits and what are its taxable implications?

- Who can receive death benefits and what forms can it take?

- Case laws to discuss various dependency and inter-dependency situations

Speaker : Agni Chowdhury

Agni has Masters in Accounting from Macquarie University and is a CPA SMSF Specialist Member. He has worked in SMSF space for over 6 years dealing with complex trustee issues. He has a special interest in actuarial certificates and their use in the proposed limiting pension balance of $1.6M post 1st July 2017.

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Budget in detail:

Removal of Work Test for 65-74 year olds

From 1 July 2017, Individuals aged 65 year or over (and up to the age of 74) will be able to make contributions without satisfying a work test. The work test is currently working 40 hours in a 30-day period in the financial year in which you plan to make the contribution.

This measure will enable those aged between 65 and 74 to top up their superannuation savings from sources that may not have been available before retirement, such as the proceeds from downsizing their home or from an inheritance.

Reduction in the concessional contribution cap to $25,000 from 1 July 2017 regardless of age (currently $30,000 or $35,000 for those aged over 50)

The concessional contribution cap will be reduced from the current level of $30,000 to $25,000 from 1st July 2017, irrespective of the age of the individual. The higher cap of $35,000 that currently applies to individuals over age 50 will be abolished. 

What will this mean?

Australians will need to start early to plan for a comfortable retirement. It will particularly impact older Australians (over 50s) who currently utilise the higher limit ($35,000) to boost their nest egg in the lead up to retirement. The revised cap of $25,000 will apply to everyone, regardless of age.

Carried forward concessional cap for account balances below $500,000

Catch up contributions permitted for “unused cap amounts” accruing from 1 July 2017 if the member balance is less than $500,000 (calculated on a rolling, five year basis). What this means is that unused portions of the concessional cap each year can be carried forward on a rolling basis for up to 5 years, for the annual caps applicable from July 2017, BUT ONLY IF YOU HAVE AN ACCOUNT BALANCE OF LESS THAN $500,000.

This measure allows some additional flexibility in the timing of your contributions but will add complication to the administration.

Personal contribution deductions permitted from 1 July 2017 without restriction up to age 75

From 1 July 2017, all superannuation fund members up to age 75 will be able to claim an income tax deduction for personal superannuation contributions up to the concessional contribution cap ($25,000), regardless of their employment circumstances.

Such a measure will assist Australians who may be partly self-employed and partly employed, or individuals who work for employers who don’t accommodate salary sacrificing.

Threshold for extra 15% superannuation contributions tax reduced from $300,000 to $250,000 from 1 July 2017

This change means that higher income earners will now have to pay an extra 15 per cent on their concessional contributions when their income is over $250,000, down from $300,000 previously.

Superannuation still remains attractive despite this change, the 30% tax applied to concessional contributions is still less than the marginal tax rate on earnings so contributing to super remains attractive. But with the lower $25,000 concessional contribution there will be limited scope for you to make optional concessional contributions.

Reduction in tax for people earning less than $37,000

From 1 July 2017, a Low Income Superannuation Tax Offset (LISTO) will be introduced to reduce tax on super contributions for low income earners.

The measure will apply to individuals with taxable income less than $37,000, and will effectively refund the tax on concessional contributions up to an annual cap of $500. This measure will replace the Low Income Superannuation Contribution (LISC) which was scheduled to be abolished from 1 July 2017, however, the mechanism will be slightly different.

Threshold raised for low income spouse superannuation tax offset from $10,800 to $37,000 from 1 July 2017

Finally, the income threshold for the spouse tax offset, where the spouse is a low-income earner, will increase. Introduced nearly 20 years ago, the current income threshold has not changed over that period and sits at $10,800. From 1 July 2017, the income threshold will lift to $37,000. A contributing spouse will be able to claim an 18% offset worth up to $540 for contributions made to an eligible spouse’s superannuation account.

Lifetime non-concessional contribution cap limit of $500,000

The existing non-concessional contribution cap (NCC) arrangements of $180,000 per year or $540,000 with 3 year bring forward rule for those under 65 will be abolished, to be replaced by a lifetime non-concessional cap of $500,000. The new cap will take into account all non-concessional contributions made on or after 1 July 2007, and will commence at 7.30 pm (AEST) on 3 May 2016. The lifetime cap will be indexed annually in line with wages growth.

However, you will not be penalised or forced to withdraw amounts from super if you had exceeded this new cap as a result of non-concessional contributions. For those that exceed the cap from 7:30pm AEST 3 May 2016, excess contributions will need to be removed or will be subject to penalty tax.

What will this mean?

Again, this change will mean that Australians need to start early to plan for retirement. The ability to make larger one-off contributions using lump sum proceeds from things like property sales, inheritance etc. will be greatly limited in the future.

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When?

Between 11 am and 3 PM - Lunch Provided

29^th September 2016

How Much?

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