Changes to superannuation
Late last year, the Federal Government passed legislation that may see changes to your superannuation arrangements occur from 1 July. This includes superannuation changes to before and after tax contributions, spouse contribution tax offsets, transition to retirement pensions tax on earnings, and more.
Do you know how the Government’s changes to superannuation may affect you?
While the Government regulations supporting the superannuation changes haven’t all been issued, the changes will be implemented soon. Therefore, you need to be aware of them.
Key changes include:
The introduction of a $25,000 ‘Concessional Contributions Cap’ (before-tax contributions)
Currently, most contractors who salary sacrifice superannuation contributions have an annual ‘cap’ of $35,000 (if you are 50 years of age, or over, on 30 June 2017) or a cap of $30,000 (if you are under 50 years of age on 30 June 2017).
From 1 July 2017, the cap will be reduced to $25,000, regardless of your age, meaning the threshold will be reached much sooner. The main take-away is to review your salary sacrificed contributions, to ensure you don’t go over the cap.
Don’t forget this also includes your Super Guarantee—the minimum amount you (or your employer) must pay into your superannuation.
The introduction of a $100,000 per annum (or $300,000 using the bring forward provisions) ‘Non-concessional Contributions Cap’ (after-tax contributions).
These are the contributions you make through your ‘after-tax’ income. With after-tax contributions, there is no tax levied in the super fund (a 15 per cent tax usually applies to concessional contributions at the actual super fund level, but in this case, there is no tax levied because the contribution is coming out of your after-tax dollars).
The extension of the eligibility of the ‘spouse contribution tax offsets’
New rules allowing a maximum tax offset of $540 are available when the receiving spouse’s income is less than $37,000, gradually reducing before cutting out completely at $40,000.
The maximum tax offset is based on a maximum $3,000 spouse contribution.
To view all changes and gain further information, view the Government’s superannuation reforms factsheets on the Treasury website. Included is a factsheet on the impact on key groups (such as contractors).
Specific information on the changes to concessional and non-concessional contribution changes are available on the Australian Tax Office website.
If you have any questions on the superannuation changes and how they affect you, contact me or my team for a confidential chat.
Please note, the information is general in nature and does not consider your individual circumstances or needs.