A range of changes to superannuation passed into law recently and they will take effect on 1 July 2017.
The changes will affect super members as well as people with retirement income accounts.
Check to see whether any of the changes affect you and don’t hesitate to call us if you need help or advice of any kind.
For more detailed information on the changes, visit ATO Super changes.
Lower annual caps on before-tax and after-tax contributions
Before-tax (concessional) super contributions include employer (SG) contributions to super and salary sacrifice. After-tax (non-concessional) super contributions include contributions to your super from money you have already paid tax on (eg. your salary).
- On 1 July 2017 the annual cap on before-tax contributions to super will be reduced to $25,000, regardless of your age.
Currently (but only until 30 June 2017) you can make before-tax contributions of up to $30,000 per annum if you were aged 48 or under at 30 June 2016 and up to $35,000 per annum if you were aged 49 years or over at 30 June 2016.
- From 1 July 2017 the after-tax contributions limit will also be lowered, from the current cap of $180,000 per annum to $100,000 per annum.
- If you have a superannuation account balance of more than $1.6 million, from 1 July 2017 you will no longer be allowed to make after-tax contributions.
Tax deduction available on after-tax contributions
From 1 July 2017 if you are under the age of 75 you will be able to claim a tax deduction on any after-tax contributions you make.
Wider availability of spouse contribution offsets
Currently spouse contribution offsets (known as the Low Income Spouse Superannuation Tax Offset) are only available to people on annual incomes of $10,800 or less, when their spouse makes super contributions on their behalf.
From 1 July 2017 the threshold will go up significantly and the offset will be available for contributions made to accounts of spouses who have an income of $40,000 or less. The offset amount will remain at the current rate of up to $540 per year.
Retirement income stream (pension) account balances to be capped at $1.6 million
From 1 July there will be a cap of $1.6 million that you can have in a tax-free retirement income stream. This includes Transition to Retirement accounts and account based pensions. You will need to transfer any excess amount into a superannuation accumulation account or withdraw it as a lump sum.
15% tax on investment earnings in Transition to Retirement income streams
From 1 July 2017 members in Transition to Retirement (TTR) income streams will pay tax of 15% on investment earnings in their account.
What does this mean for you?
If you’re making super contributions near the current limits, if you approaching retirement or if you have more than $1.6 million in your super account, you may need to get some advice on how to change your strategy when the new limits come in on 1 July.
Or if you’re keen to top up your super you may want some advice on doing so under the higher limits that are in place until 1 July.
What to do now
- To check your current contributions to your REI Super account, simply log into your online account at www.reisuper.com.au
- One of the great benefits of REI Super membership is that you have access to free professional financial advice on your contributions, investment and insurance options within REI Super. We also provide low-cost, fixed fee advice advice on setting up or reviewing a transition to retirement strategy. Call our Helpline on 1300 13 44 33 to arrange a time to talk to an adviser.
The information contained in this article does not constitute financial product advice. REI Super does not give any warranty to the accuracy, completeness or currency of the information provided. Although REI Super makes every reasonable effort to maintain current and accurate information, you should be aware that there is still the possibility of inadvertent errors and technical inaccuracies.