Last week the Federal Treasurer announced further refinements to the Australian superannuation system as proposed in the May 2016 Federal Budget.
The four key areas addressed in the announcement were:
- The $500,000 “lifetime” Non-Concessional Contributions (NCC) cap has been scrapped and replaced with an annual capThe new annual NCC cap reduces from the current $180,000 (FY2016–17) to $100,000 as of 1 July 2017.
- The concept of a “bring-forward” rule remains, but in a revised formIndividuals aged under 65 as of 1 July 2017 will continue to be able to “bring forward” three years’ worth of NCC’s, but only based on the lower annual cap of $100,000 as outlined above. Those aged 65 and over will only be able to make NCC’s where they meet the work test (that is, 40 hours worked within a 30 day period within a financial year) and as is the case currently, they won’t be able to avail themselves of a “bring-forward” amount.
- A “total balance” cap of $1.6 million will apply from 1 July 2017, based on the balance valued at 30 June 2017Individuals with a superannuation balance of more than $1.6 million as of 1 July 2017 will no longer be eligible to make NCC’s, irrespective of their age.
- “Catch up” Concessional Contributions (CC) will now apply from 1 July 2018Individuals with superannuation balances of $500,000 or less will be able to accrue additional CC cap amounts from 1 July 2018 (previously this was to be 1 July 2017). Individuals will be able to access their unused CC’s cap space on a rolling basis for a period of five years. Amounts that have not been used after five years will be effectively forfeited.
For a brief summary of each of these key areas click here to visit the article on the Fordham website.
Note : This article has been sourced from the Fordham TaxAlert dated 22 September 2016.