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 |
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$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. |
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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.
