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