New financial year… new rules
As of 1 July, new rules came into play for super, some of which were proposed in last year’s budget. Make sure you’re across it, and if you’re not sure about how they may impact you – call us we’re here to help.
Concessional contribution caps
The annual concessional (before-tax) contribution cap will decrease to $25,000 for all members, regardless of age.
If your employer’s super contributions plus any salary sacrifice contributions you make exceed your cap, you will pay additional tax.
Non-concessional contribution caps
The non-concessional (after-tax) contribution cap will decrease from $180,000 to $100,000.
If you’d like to make after-tax contributions to your super, keep in mind that you can only contribute up to $100,000 each year without having to pay additional tax.
If your total account balance is $1.6 million or more, you cannot make non-concessional contributions.
The bring-forward amount for non-concessional contribution caps
The bring-forward amount will decrease from $540,000 to $300,000.
If you’re under 65, you can bring forward 3 years’ worth of non-concessional contributions to a maximum of $300,000. If your super account balance is $1.6 million or more, you cannot bring forward any non-concessional contributions.
If you have already triggered the bring-forward rule, you have until 30 June 2017 to contribute up to the cap of $540,000; after that, any unused amount will reduce under the transition rules.
Tax deduction for personal contributions
If you’re under 65, or aged between 65-74 and meet the work test*, you can apply for a tax deduction for personal contributions made to your super - you no longer have to be self-employed to be eligible to do this.
These amounts will be taxed in the fund at 15% and count towards your concessional contribution cap.
The Low Income Super Tax Offset
The Low Income Super Tax Offset (LISTO) will replace the Low Income Super Contribution (LISC) and provide up to $500 a year for those earning less than $37,000.
If you earn less than $37,000 a year and make concessional contributions to your super, you will continue to receive up to $500 from the Government.
The tax offset amount for spouse contributions
Your spouse can now earn more and still be entitled to the spouse tax offset.
They can earn up to $40,000 to receive up to $540. Your spouse must be under 70, and if they’re aged between 65-69, they will need to meet the work test*.
* The work test requires people to have been gainfully employed for at least 40 hours in a consecutive 30-day period.