Budget measures

The Government’s changes to the Australian superannuation system have been designed to “enhance stability in the superannuation system”, legislating that the primary objective of the superannuation system is “to provide income in retirement to substitute or supplement the Age Pension” [1].

The following measures have been introduced as part of the reform package. Select the links below for further explanations of each measure.

Transfer Balance Cap

The Transfer Balance Cap (TBC) is a limit that will apply to the total amount of superannuation that can be transferred into a superannuation income stream or pension product (a ‘retirement phase account’).

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Tax on Concessional Contributions

The current Division 293 threshold is $300,000 until the end of the 2016-17 financial year. This threshold will be lowered to $250,000 from 1 July 2017.

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Super Concessional Contributions Caps

The concessional contributions cap will reduce to $25,000 per annum for everyone regardless of age from 1 July 2017.

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Non-Concessional Contributions Cap

An annual cap of $100,000 will replace the current $180,000 cap from 1 July 2017. Additionally, non-concessional contributions may only be paid where the members account balance* is less than $1.6 million.

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Tax Exemption on Earnings of Assets Supporting Transition to Retirement Income Streams

From 1 July 2017, Transition to Retirement (TTR) income streams will no longer receive the same tax concessions as account based pensions. That is, their investment earnings will no longer be tax free.

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Deductibility of Personal Contributions

From 1 July, the eligibility requirements for individuals to claim a tax deduction on personal contributions will be removed which extends this option to those who do not meet the current definition of ‘substantially self-employed’. 

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Work Test Rules

Individuals aged from 65 to 74 years will still need to have worked for at least 40 hours within 30 consecutive days in a financial year to be eligible to make personal superannuation contributions.

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Low Income Super Tax Offset

From 1 July 2017, the Government will introduce the Low Income Superannuation Tax Offset (LISTO).

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