With Australians embracing self-managed superannuation funds (SMSF) at a steadily increasing rate, it was only a matter of time before the Federal Government moved the goal posts. Changes were announced in May 2016, before finally clearing Parliament in November 2016.
The rules are set to come into effect from 1 July 2017. Below is a look at the key changes:
Current rules |
New rules – from 1 July 2017 |
| Concessional (i.e. deductible) contributions | |
| Annual limit of $30,000, or $35,000 for over 50s | Annual limit of $25,000 regardless of age |
| No ‘carry-forward’ of any unused annual cap | Ability to ‘catch-up’ unused cap on a rolling 5-year basis for those with <$500k in super (From 1 July 2018) |
| Additional 15% contributions tax for those earning <$300,000 | Threshold reduces to $250,000 |
| Deduction only allowed for personal contributions if <10% of your income is from employment | No restriction based on source of income |
| Non-concessional (i.e. non-deductible) contributions | |
| Annual limit of $180,000 | Annual limit of $100,000 if you have <$1.6m in super |
| Under 65s can ‘bring-forward’, to make 3 years’ contributions – allows $540,000 in one year | Ability to bring-forward limited to $300k, and only for those with <$1.6m in super after allowing for such contributions |
| Additional 15% contributions tax for those earning <$300,000 | Threshold reduces to $250,000 |
| Pensions | |
| Transition to retirement (“TRIS” or “TRIP”) allows Fund earnings to be tax-free | 15% tax rate on Fund earnings |
| Unlimited amounts can be transferred to pension phase | Limit of $1.6m, with excess taxed at 15% in the Fund |
As with many tax laws, this raft of changes is very complex. They do however present some planning opportunities depending on your individual circumstances and objectives. For further information on the above and how it applies to you, please contact your MPT advisor.