By James Nott, B.Com, CA, CTA
After considerable debate in the Community the amendments have now been passed by both houses of Parliament.
Key amendments, most of which apply from 1 July 2017 are as follows:
Concessional Contributions
These are contributions by an employer, a business or a personal contribution which are tax deductible.
Presently the maximum amount allowed to be contributed is $30,000 (individuals aged less than 50) and $35,000 (individuals aged 50 and over.
This will reduce to $25,000 for everyone regardless of age.
Note that the rule that required taxpayers to earn less than 10% of their income from employment will be removed.
Non-Concessional Contributions
These are contributions made by individuals which are not tax deductible. Such contributions are often made as a result of an inheritance or the sale of a major asset such as a property.
Presently the maximum amount allowed to be contributed is $180,000 per annum.
This will reduce to $100,000 per annum.
The bring forward rule which allows those under 65 years of age to contribute for three years in one year will reduce from $540,000 to $300,000.
Non-Concessional contributions cannot be made when a member’s superannuation balance reaches $1.6 million.
Superannuation pension cap of $1.6 million
This important change imposes a maximum amount that can be held in pension mode will be limited to $1.6 million. Any excess over this amount has to be withdrawn or transferred to another account in the Fund which will be treated as an accumulation balance ie income is subject to income tax at 15%.
