Super tax changes

1 December 2016

The Government’s reform package of super tax changes, announced in May’s Federal Budget, recently passed through both houses of Parliament.

The following changes come into effect on 1 July 2017:

  • the low income superannuation tax offset (LISTO), an incentive for low income earners to save for their retirement, will ensure that people with an adjusted taxable income of up to $37,000 a year1 continue to receive an annual boost to their super of up to $500. This is great news for low income earners with the current low income super contribution (LISC), due to expire next year.
  • the introduction of a cap which will limit how much can be transferred into a retirement account to $1.6 million. This applies to both existing and new pension accounts.
  • a reduction in the concessional contributions cap to $25,000 regardless of their age.
  • reduction of Division 293 income threshold to $250,000. People earning >$250,000 will pay 30% tax on their concessional contributions. Previously exempt fund members, in certain public sector funds, will also be subject to this extra tax.
  • reduction of annual non-concessional contributions cap to $100,000, with an eligibility threshold of $1.6 million. From 1 July 2017, if an individual’s super balance is $1.6 million at the beginning of a financial year, they will no longer be able to make non-concessional contributions to their super.
  • the ability for all individuals to claim a tax deduction on personal contributions – presently only available to the self-employed or substantially self-employed members.

1 ATO - Introducing a Low Income Superannuation Tax Offset

From 1 July 2018, the ability for individuals with super balances below $500,000 to make ‘catch up’ concessional contributions will commence.

Further changes may occur and we will keep you updated if and when they do.

If you would like to discuss how any of these changes might affect your super, you can email us or call us on 1800 005 166.

This article contains information that is intended to be general in nature and which was prepared without taking into account your personal objectives, financial situation or needs. Because of that, before acting on any information or advice in this article, please consider whether it is appropriate to your personal circumstances, talk to a financial adviser and consider the relevant member guide, available here, or by calling 1800 005 166, before making a decision about whether to acquire the products.