Since Budget night in May, the proposed superannuation reforms have faced both support and scrutiny by Australians. The Government has amended some of their original reforms and three major changes were announced on 15 September 2016.
The updated proposals affect the concessional and non-concessional contribution caps, and the work test for those aged 65 to 74.
These changes are summarised below. For details on all the super reforms announced this year, please read our fact sheet.
Non-concessional (after-tax) contributions
The $500,000 lifetime non-concessional cap proposed in May has been replaced with an annual cap of $100,000. This is a reduction from the existing cap of $180,000.
From 1 July 2017, individuals with a superannuation balance of more than $1.6 million will no longer be eligible to make non-concessional contributions. Individuals under 65 will be able to bring forward three years’ worth of non-concessional contributions, based on the new cap.
Concessional (before-tax) contributions
The catch up measure, that allows individuals with super balances of $500,000 or less to make catch-up contributions of unused caps from the prior 5 years, has been deferred to begin from 1 July 2018, instead of next year.
Work test for those 65 to 74
The original proposal to scrap the work test for those between 65 and 74 has been abolished. Super savers of this age will need to meet the work test before making after-tax or before-tax contributions to their super.
We understand that the speculation around the changes may have undermined your confidence in the superannuation system. Please remember we are here to help. If you are concerned about the changes, we encourage you to speak to a Vision Super Financial Planner. For assistance please contact Vision Super on 1300 300 820.