In the May 2016 Federal Budget, several reforms to superannuation were announced. From 1 July 2017, some key changes will come into effect:
• There will be a $1.6 million transfer balance cap on the total amount of accumulated superannuation an individual can transfer in the pension phase. Savings beyond this can remain in an accumulation account where they will be taxed at 15%. • The threshold at which high income earners pay additional contributions tax will be lowered from $300,000 to $250,000. • The annual cap on concessional (pre-tax) superannuation contributions will be lowered to $25,000. • The annual non-concessional contributions cap will also be lowered to $100,000. Individuals with a balance of $1.6 million or above will no longer be eligible to make non-concessional contributions. • The Low Income Superannuation Contribution (LISC) will be replaced by the Low Income Superannuation Tax Offset (LISTO). Individuals who have a taxable income of up to $37,000 will receive refunds on tax paid on their concessional contributions, up to a cap of $500. • All individuals under the age of 65 will be able to claim a tax deduction for personal contributions to eligible funds. Previously, this was only available to individuals who earned less than 10% of their income from salary and wages. • The current spouse tax offset will be made available to more couples: eligible recipient spouses can now earn up to $40,000, an increase from $10,800. The maximum tax offset is up to $540.
The Treasury hopes that the above changes, along with other amendments, will improve the fairness, sustainability, flexibility and integrity of the superannuation system.