Superannuation reform bills passed by both Houses of Parliament
- 25 November 2016
As previously mentioned on our website, two superannuation bills were passed by both Houses of Parliament on 23 November 2016.
The Treasury Laws Amendment (Fair and Sustainable Superannuation) Bill 2016 and the Superannuation (Excess Transfer Balance Tax) Imposition Bill 2016 will now go to the Governor-General’s office to receive Royal Assent, thereby enacting superannuation reforms outlined in the 2016 Federal Budget and subsequent changes released in September 2016.
The bills include the following reforms to superannuation laws which will take effect from 1 July 2017:
- The concessional contribution cap will be reduced to $25,000 for all individuals regardless of age.
- The non-concessional contribution cap will be reduced to $100,000 (currently $180,000) for all individuals under the age of 75.
- A restriction on making non-concessional contributions will be placed on individuals with total superannuation balances in excess of $1.6 million (as at prior year end).
- A $1.6 million cap will be placed on the transfer of individuals' superannuation balances from accumulation to pension phase.
- The removal of the tax-free status of income earned on assets supporting Transition to Retirement Income Streams.
- The reduction of the Division 293 tax income threshold to $250,000 (currently $300,000).
- The removal of the “10% test” which imposes a restriction on individuals receiving more than 10% of assessable income from employment activities making personal concessional contributions.
- The introduction of “catch-up” concessional contributions over 5 years (for individuals with a superannuation balance of less than $500,000).
- The introduction of a Low Income Superannuation Tax Offset to replace the Low Income Super Contribution (currently up to $500 for individuals earning up to $37,000).
- An increase to the threshold to claim the Low Income Spouse Contribution Tax Offset to $40,000 (currently $13,800).
- The removal of the anti-detriment provisions (currently the anti-detriment provisions can be applied for payments of deceased members superannuation entitlements to beneficiaries.
Although the changes may provide new planning opportunities for some individuals, for others existing opportunities may come to an end. Further, you may need to take action prior to 30 June 2017, particularly in the following situations:
- You have more than $1.6M in superannuation;
- You currently draw a Transition to Retirement Income Stream, or intend to do so;
- You plan to make a large once-off contributions into superannuation within the next 12 months; or
- You currently draw a Defined Benefit Income Stream, or intend to do so.
If you wish to discuss these superannuation reforms in more detail please contact your Walker Wayland NSW advisor.