The Government has announced changes to the to the superannuation reform proposals (tabled in the May Budget) and it’s good news.
Eligible individuals have until 1 July 2017 to take advantage of the existing tax incentives in superannuation, including $180,000 per annum non-concessional contribution cap or up to $540,000 non-concessional contributions using the ‘bring-forward’ rule. So it’s a great chance to take advantage of the opportunity to contribute to superannuation before the rules change.
Here’s a brief summary of the changes
- The proposed $500,000 lifetime cap on Non-Concessional Contributions (NCC) has been dropped
- From 1 July 2017:
- The new limit on NCC will be $100,000 (down from $180,000) per annum
- Eligible individuals under 65 any time in the financial year will still be able to ‘bring-forward’ three years of non-concessional contributions (i.e. allowing NCCs of up to $300,000 using the bring-forward rules)
- Individuals aged 65 to 74 will be able to contribute $100,000 as a NCC provided they meet the work test.
- Individuals with a super balance of more than $1.6 million will no longer be able to make NCCs.
- The removal of the work test to contribute to superannuation for those aged between 65 and 74 will not proceed. The existing work test for those in this age bracket to make contributions will remain.
Note that the amendments still have to pass Parliament. However, now is the time for individuals who may have been waiting for certainty on this issue to take full advantage on the non-concessional contribution limits.
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