2016-17 budget superannuation reforms
On 9 November 2016, the Government introduced legislation to implement its 2016-17 Budget superannuation reforms. The package of superannuation bills has been referred to the Senate Economics Legislation Committee for report by 14 February 2017. One of the bills proposes to reduce the annual non-concessional cap following the Government’s announcement that it would not proceed with its original Budget proposal for a $500,000 lifetime non-concessional contributions cap.
If legislated as currently drafted, this legislation will lower the annual non-concessional contributions cap from $180,000 to $100,000 pa from 1 July 2017 (or $300,000 over 3 years for those under age 65). Importantly, individuals with a total superannuation balance of $1.6m or more will no longer be eligible to make non-concessional contributions from 1 July 2017. The $1.6m eligibility threshold will be based on an individual’s “total superannuation balance” as at 30 June for the previous year. As a result, before making a non-concessional contribution, a person will need to know their “total superannuation balance” on 30 June of the previous financial year to ensure that it is below the general transfer balance cap ($1.6m for 2017-18).
If you are considering increasing your superannuation balance with non-concessional contributions, there may be some advantage in making the contributions before 30 June 2017.