The legislation for the Government’s changes to the superannuation system has been passed by parliament. The measures include:
- The new transfer balance cap - this will cap pensions to $1.6 million
- Lower non-concessional contributions caps – reduced from $180K to $100K
- Lower concessional contributions caps – reduced from $30K/$35K to $25K
- The abolition of the 10% test for personal deductible contributions
- The ability to make catch up concessional contributions over a 5 year period (commencing 1 July 2018)
- Removing the earnings tax exemption (ie pension phase) for transition to retirement income streams
Given that these new laws generally commence from 1 July 2017, there are a number things to consider in the coming months, including:
- The last opportunity to make contributions under the current caps. This includes:
- the ability to make non-concessional contributions of $180K for the 2016/17 year
- the ability to use the bring forward rule to make non-concessional concessional contributions of up to $540K before 1 July 2017
- the ability to make $30K (or $35K if aged 50+) of concessional contributions before 1 July 2017
- for members who have account balances of over $1.6 million, the last chance to make non-concessional contributions (as they won’t be able to make such contributions from 1 July 2017)
- For members with pension accounts over $1.6 million, they will need to consider the introduction of the transfer balance cap, including:
- how the cost base reset will work on 30 June 2017 and whether to make an election to utilise it
- how to effect a commutation of excess pension amounts at 1 July 2017
- how to structure death benefit pensions
- For members with transition to retirement income streams
- whether such pensions can be converted into account based pensions
- if not, whether to cease or continue such pensions from 1 July 2017
To discuss this article, or for further information please contact:
Phil Broderick
Principal
Sladen Legal
T +61 3 9611 0163 l M +61 419 512 801
Level 5, 707 Collins Street, Melbourne, 3008, Victoria, Australia
E: pbroderick@sladen.com.au
Melissa Colaluca
Associate
Sladen Legal
T +61 3 9611 0161
Level 5, 707 Collins Street, Melbourne, 3008, Victoria, Australia
E: mcolaluca@sladen.com.au