Budget Brief: Superannuation
It is a relief to note that no new major superannuation measures were contained within the Budget. Given the announced changes set to start on 1 July 2017 (refer below), this is not a surprise, however, given the tinkering with Superannuation in recent years nothing should be unexpected.
- Concessional contributions are to be capped at $25,000.
- The non-concessional contribution limits are changing and can be broadly summarised as follows:
- The current treatment for superannuation funds in pension phase or transition to retirement (TIR) phase are changing, with TIR losing its tax free status. Funds currently in pension phase with more than $1.6m will only receive tax free status on $1.6m. As part of this change individuals with more than $1.6m in pension phase will need to transfer the excess back into accumulation on or before 30 June 2017.
Whilst noting no major changes will occur as a result of the Budget, the Budget did contain some changes in respect of superannuation as follows:
- The non-arm’s length income provisions will be amended from 1 July 2018 to reduce opportunities for members to use related-party transactions on non-commercial terms;
- Limited recourse borrowing arrangements will be included in a member’s total super balance and the $1.6m pension transfer balance cap from 1 July 2017;
- A person aged 65 or over will be able to make a non-concessional contribution of up to $300,000 from the proceeds of selling their home from 1 July 2018 where they have lived in the home for at least 10 years. The contribution will be exempt from the age test and the $1.6m cap; and
- A first home super saver scheme will allow future voluntary contributions to superannuation made by first home buyers from 1 July 2017 to be withdrawn for a first home deposit, along with associated deemed earnings. These provisions are designed to enable up to $15,000 per year to be contributed pre-tax, to a maximum of $30,000 in total.