Super changes effective from 1 July 2017

On 1 July 2017, a number of super changes came into effect that were designed to limit the amount of extra contributions you make towards super and how much you can ultimately transfer into a tax-exempt income stream.

Key numbers you need to know

 

Growing Super

Contribution Limits
Pre-1 July 2017
From 1 July 2017

Before-tax contributions

$35,000 (if over age 49) a year 

$30,000 (if under age 49) a year

$25,000 a year^

Catch-up before-tax contributions

Not available

If you have less than $500,000 in super at the start of the financial year, unused before-tax contributions can be added to boost your super balance over a five-year rolling basis.

After-tax contributions

$180,000 a year

$100,000 a year^

Bring forward after-tax contributions

$540,000 over 3 years

$300,000 over 3 years^

However there are some transitional arrangements in place for individuals who already triggered the Bring Forward Rule during the 2015-16 or 2016-17 financial years but had not used it fully by 30 June 2017 (i.e. you did not contribute $540,000 by 30 June 2017).

More information on these transitional arrangements can be found here.

Government co-contributions

$500 maximum co-cont, if your income is less than $36,021, phasing out at $51,021

 Thresholds and maximum co-contribution remains the same, however from the 2017–18 financial year, to be eligible for a co-contribution:

-   Your total super balance (across all of your funds) must be less than the general transfer balance cap for that year, and

-   The contribution you make to your super fund must not exceed your non-concessional contributions cap for that year.

Further information is available here.

Spouse tax offset

Your spouse must earn less than $13,800 a year for you to be eligible for the tax offset.

The income threshold is $40,000 a year however to be eligible for the offset your spouse must not exceed their non-concessional contributions cap for the relevant year or have a total super balance equal to or exceeding the general transfer balance cap immediately before the start of the financial year in which the spouse contribution was made.

Low income super contribution

$500 refund of super contributions tax if you earn less than $37,000.

 Is now called the Low Income Super Tax Offset (LISTO). Eligibility is the same. 

Deducting personal contributions (self-employed)

To claim a tax deduction you must earn less than 10% of your income from salary and wages

Most people, regardless of their employment arrangement, are able to claim a full deduction for personal super contributions they make to their super until they turn 75.

If you’re aged between 65 and 75 you will need to meet the work test to be eligible to claim the deduction. More information is available here.

     

^ The amount of the cap will start at $1.6 million, and will be indexed periodically in $100,000 increments in line with CPI

 

 

 


Tax on super going in

 
Pre-1 July 2017
From 1 July 2017

Before-tax contributions*

15%

No change

After-tax contributions

0%

No change

High income earners (Div 293 surcharge)

30%, where taxable income is $300,000 or more

30%, where taxable income is $250,000 or more

* Includes Employer Superannuation Guarantee (“SG”) contributions, currently 9.5%. 

 

 

Tax on super coming out

 
Pre-1 July 2017
From 1 July 2017

Tax on payments to for temporary residents leaving Australia

38% for a taxed element of a taxable component

47% for an untaxed element of a taxable component

 65%

Tax on Transition To Retirement(TTR) income streams

 

If you are aged 55-59, no tax is payable on the tax-free component of your income payment.

The taxable component is added to your taxable income and taxed at your marginal tax rate, less a 15% tax offset.

If you are aged over 60, your income payment is tax-free.

 No change

 

Investment earnings in super accumulation account

 15%

 No change

 

Investment earnings in a TTR income streams

 0%

 

15%

(same as super accumulation accounts)
 

Investment earnings in an allocated income stream

 0%

 No change

 

Lifetime super limit

How much you can transfer to an income stream
Pre-1 July 2017
From 1 July 2017

General transfer balance cap

n/a

$1.6 million as at 1 July 2017^.

Amounts above lifetime limit

n/a

If you exceed the transfer balance cap, you will need to:

-    remove the excess amount from your income stream and transfer it back to your

accumulation account, or

-    Take the excess amount as a lump sum. 

More information is available here

^ The amount of the cap will start at $1.6 million, and will be indexed periodically in $100,000 increments in line with CPI.