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Changes to super

Superannuation 2017-18

From July 1st 2017 a number of superannuation changes originally proposed in the 2016-2017 Federal Budget will take place. The changes are positive overall, improving the equity, efficiency and sustainability of super tax concessions.

The changes include:

Introduction of a transfer balance cap

A $1.6 million cap has been introduced on the amount that can be transferred to super in retirement phase when earnings are tax-free. Additional savings can remain in an accumulation account (where earnings are taxed at 15 per cent) or remain outside super. This comes into effect from 1 July 2017 and will be indexed in following years. Retired people with retirement phase balances below $1.7 million on 30 June 2017 will have 6 months from 1 July 2017 to bring their balances under $1.6 million.

Concessional superannuation contributions cap reduced

The annual concessional contributions cap has been reduced to $25,000 (from $30,000 for those aged under 49 at the end of the previous financial year and $35,000 otherwise). This comes into effect from 1 July 2017.

Concessional superannuation contributions tax threshold reduced

The threshold at which high-income earners pay Division 293 tax on their concessionally taxed contributions to superannuation has been reduced from $300,000 to $250,000. This comes into effect from 1 July 2017.

Non-concessional contributions cap reduced and criteria introduced

The annual non-concessional contributions cap has been reduced from $180,000 to $100,000. In addition, criteria for an individual to be eligible for the non-concessional contributions cap has been introduced and other minor amendments to the non-concessional contributions rules have been made. These changes come into effect from 1 July 2017.

Low Income Superannuation Tax Offset to replace the Low Income Super Contribution

The Low Income Superannuation Tax Offset (LISTO) will replace the Low Income Superannuation Contribution from 1 July 2017. The LISTO refunds up to $500 of the tax paid on concessional super contributions for low-income earners with a taxable income of up to $37,000.

Greater deductibility of personal contributions

The requirement that an individual must earn less than 10 per cent of their income from employment to be able to deduct a personal contribution to their super to make it a concessional contribution has been removed. This will apply from the 2017-18 income year.

Allowing ‘catch-up’ concessional contributions

Individuals whose superannuation balance at the end of the previous financial year is less than $500,000 will be able to carry forward unused concessional cap amounts from the previous five years. This applies to working out an individual’s concessional contributions cap from the 2019-20 financial year onwards.

More tax offsets for spouse contributions

This increases the amount of income an individual’s spouse can earn before the individual stops being eligible to a tax offset for contributions made on behalf of their spouse. This will apply from the 2017-18 income year.

Changes to earnings tax exemptions

The earnings tax exemption has been extended to new lifetime products (including deferred products and group-self annuities). The earnings tax exemption for transition to retirement income streams has been removed. An integrity measure that will apply to self-managed super funds and other small funds has been introduced. These changes will apply from the 2017-18 income year.

Abolishing the anti-detriment rule

The anti-detriment provision which allows superannuation funds to claim a tax deduction for a portion of the death benefits paid to eligible dependants will be removed from 1 July 2017.

Super Guarantee rate increase changes were previously legislated to increase according to the following timetable

The Super Guarantee contribution rate is set to reach 12% in 2025

Financial yearRate
2015/16 9.5%
2016/17 9.5%
2017/18 9.5%
2018/19 9.5%
2019/20 9.5%
2020/21 9.5%
2021/22 10.0%
2022/23 10.5%
2023/24 11.0%
2024/25 11.5%
2025/26 12.0%

Click to see the proposed changes which have not yet been legislated.

Click to see pension changes.