Unfortunately, superannuation has been caught in the headlights in this years budget. The proposed changes will cause a raft of issues (and opportunities) to consider for clients and their retirement strategies. As I write this on budget night, my mind is racing with the new strategies that will need to be employed, the strategies that wont work anymore, and questions on how this years budget will impact our clients. I was hoping for a smooth sail into the end of financial year…. not so.
As is the same with every budget night, everyone seems to produce their own take on their budget analysis, in fact it has turned into a race of sorts to produce the first budget summary.
I’ve decided to attached the useful summaries we receive from various sources over the next day or so for you to read, as well as some of the key highlights/issues to consider affecting our clients in particular.
For the full budget, head to www.budget.gov.au, alternatively have a look at the summaries below.
- $1.6 million superannuation transfer balance cap, limiting the amount that can be transferred to retirement phase
- lowering of the concessional contributions cap to $25,000 , however individuals with superannuation balances under $500,000 will be able to rollover their unused concessional contributions cap from previous years.
- limiting of the non-concessional contributions through a lifetime cap for non-concessional contributions of $500,000
- the tax exemption for earnings on assets supporting ‘transition to retirement’ income streams will be removed, and the anti-detriment payment will be abolished
- a reduction in the threshold from which an extra 15% tax applies on contribution to super, from $300,000 to $250,000
- the $80,000 tax threshold will be raised to $87,000
- companies will eventually face a reduced company tax rate, with the rate gliding down to 25% over ten years
- From 1 July 2017, individuals under the age of 75 will no longer have to satisfy a work test and will be able to receive contributions from their spouse.
- From 1 July 2017, individuals up to age 75 will be able to claim an income tax deduction for personal superannuation contributions. This will apply regardless of employment status