Snapshot of super changes in the Federal Budget
The cornerstone of this year’s federal budget 2016/17 was the announcement of a number of key superannuation changes. These are the biggest changes to super since then-treasurer Peter Costello delivered his 2006-07 federal budget.
Super related changes include:
- Low income tax offset retained, a super savings boost of up to $500 a year for those earning up to $37,000
- Reduced $25,000 concessional (before-tax) contributions cap for all, starting 1 July 2017
- New $500,000 lifetime cap on non-concessional (after-tax) contributions will apply, effective immediately
- New catch up measure for those with balances < $500,000 from 1 July 2017
- 30% concessional contribution tax for those earning over $250,000 commences 1 July 2017
- New $1.6 million cap for transfers to pension accounts, from 1 July 2017
- Extension of tax deduction for personal contributions will be extended to all individuals from 1 July 2017
- Transition to Retirement changes: earnings on assets supporting transition to retirement income streams will be taxable from 1 July 2017
- Extension of spouse tax offset and eligibility criteria will be extended from 1 July 2017
- Extension of tax deduction for personal contributions will be extended to all individuals from 1 July 2017
- The work test for individuals aged from 65 to 74 will be removed from 1 July 2017
- Changes to defined benefits schemes, starting 1 July 2017
These measures have different starting dates, with some are effective immediately, others next year and some retrospectively.
It is important to emphasise that most people will not be adversely impacted by the new measures. The Government announced that higher contribution taxes, setting limits to the amount that can be contributed to super; will affect about 4 per cent of high end Australians.
Other non-super related decisions included:
- Negative gearing remains unchanged in this budget
- From 1 July the 32.5% income tax threshold has been lifted from $80,000 to $87,000
- The temporary budget repair levy of 2% on income over $180,000 has not been extended beyond June 2017
- While the Government announced an additional $1.2 billion for schools between 2018 and 2020, this falls short of the Gonski funding it promised it would match at the 2013 election.
Buried deep in the budget is a reference to a list of decisions worth about $1.6 billion that are “not yet announced”, and an undisclosed saving in 2019 of almost $2 billion. These measures would need to be announced by the Government within 10 days of the start of the campaign, so this is a hint of things to come. What exactly this will be remains a mystery, but with the $2 billion clawed back in 2019 more than offsetting the $1.6 billion in spending there will definitely be some winners and losers.
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This article is not intended to be financial advice and is of a general nature only that does not take into account your individual objectives, financial situation or needs. While all efforts have been made to ensure the information contained in this article is accurate, errors may occur.
