Changes to superannuation budget measures

Superannuation

By Peter Kelly, Retirement Strategies and Solutions Specialist, Centrepoint Alliance. 
Published 14th September 2016.

On 15 September 2016 Scott Morrison, Treasurer, and Kelly O’Dwyer, Minister for Revenue and Financial Services, held a joint press conference to announce major changes to some of the superannuation measures that were announced in the 2016/17 Federal Budget.

The changes announced will scrap the controversial $500,000 lifetime cap on non-concessional contributions, alongside a number of other changes. The following table sets out the announcements. These changes passing will be subject to the successful pathway required to amend legislation; which is expected to be tabled in parliament by the end of this year. 

Previous budget announcement
Proposed amendment

$500,000 lifetime cap on non-concessional contributions to apply from 3 May 2016, and inclusive of non-concessional contributions made since 1 July 2007.

The lifetime cap is to be scrapped.

It will be replaced with a $100,000 annual cap on non-concessional contributions, with the ability for those under 65 to bring forward up to three years of contributions.

Non-concessional contributions will only be available to people with less than $1.6M (indexed) in superannuation.

This measure is to take effect from 1 July 2017.

Removal of the work test – thereby enabling people aged between 65 and 74 to make superannuation contributions without having to be gainfully employed for a minimum period of 40 hours within a 30-day consecutive period.

To apply from 1 July 2017.

This measure will not be continuing.

Consequently individuals wishing to make superannuation contributions between the ages of 65 and 74 will need to meet the work test, which currently applies.

A concessional contribution catch-up would allow people with less than $500,000 in superannuation to carry forward any unused portion of their concessional contribution cap for a period of up to five years.

To apply from 1 July 2017.

This measure will continue, however, its implementation will be deferred by one year.

To take effect from 1 July 2018.

The implementation of these changes will result in a cost saving for the government of $180M over the forward estimates. Fact sheets on the government’s superannuation changes are available here

Source: Even fairer, more flexible and sustainable superannuation. A joint media release issued by the Hon Kelly O’Dwyer MP and the Hon Scott Morrison MP – 15 September 2016.