Concessional contribution cap reduced to $25,000
Non-concessional contribution cap reduced
From 1 July, the concessional contributions cap (money contributed before tax, for example employer or salary sacrifice contributions) will be reduced to $25,000 for everyone. This is a reduction of up to $10,000 dependent on your age. If your concessional contributions currently exceed $25,000, you should review the amount contributed from 1 July to avoid paying additional tax.
From 1 July, the non-concessional contributions cap (money contributed to your superannuation account from your after tax income or other sources of taxed money, e.g. from the sale of investments such as shares, property or an inheritance) will reduce from $180,000 per year to $100,000 per year. If you are under age 65, you will still be able to take advantage of the ‘bring forward’ rule which allows you to combine three years’ of contributions.
Introduction of a $1.6 million transfer balance cap for retirement
If you have a Pension account balance over $1.6 million (across all Pension accounts held with any fund), you will be required to move the excess amount into a super fund, or withdraw it.
From 1 July, you will not be able to commence a Retirement Pension of more than $1.6 million.
If you have a superannuation balance over $1.6 million (across all of your superannuation accounts if you have more than one) you will not be able to make non-concessional contributions to super after 1 July.
Deductions now available for everyone for personal contributions to super
From 1 July, everyone will be able to claim a tax deduction for personal contributions made to their super accounts, up to the concessional contributions cap of $25,000. Previously, this was only possible for people who were self-employed. This is great news if you want to make an additional contribution yourself, rather than through your employer.
Spouse contributions threshold raised
There is currently a tax offset available for contributions you make to your spouse’s superannuation account if they earn under $13,800. This income level is being increased to $40,000, which means that many more members can benefit from the offset.
Transition to Retirement (TTR) taxation of investment earnings
Currently all investment earnings in TTR Pensions, are not taxed. From 1 July, this exemption will be removed and tax will be payable on earnings in TTR accounts, in the same way as it is in super accounts. If you’re currently a TTR member we will be contacting you in the next few months to give you more details about how this may affect you.
Additional contributions tax (Division 293 tax) for income over $250,000
People who earn over $250,000 will pay an additional 15% tax on their concessional (before tax) contributions from 1 July. This threshold was previously set at $300,000.
BUSSQ is here to help you and we can provide a range of financial planning services to minimise the effect these government changes may have on you. For more information or to discuss your personal situation call 1800 MY BUSSQ (1800 69 2877).