On September 15 the Government announced significant changes to the proposed superannuation reforms, providing clarity and certainty for clients around Superannuation. The removal of the retrospective $500,000 lifetime non-concessional cap is something that our profession has advocated since the initial proposal.
Below are the key proposals that may impact our clients:
No change to 3 May proposals
From 1 July 2017:
- Extended deductions for personal contributions through removal of the 10% rule.
- The lowering of Concessional Contributions (CC) cap to $25,000 pa.
- Additional 15% contributions tax, Division 293 tax: threshold reduces to $250,000.
- Introduce the $1.6M pension transfer cap.
- Defined benefit scheme changes - details to be confirmed.
- Remove tax exemption for earnings on assets supporting transition to retirement income streams.
Changes to 3 May proposals
- The CC catch up provisions will not commence until 1 July 2018.
- Contribution eligibility requirements for those aged 65 to 74 (work test) will still apply.
- The retrospective $500,000 lifetime cap has been dropped. Instead, a reduction of Non Concessional Contributions (NCC) cap from $180,000 pa to $100,000 pa from 1 July 2017. The 3-year bring forward provisions will remain based on the lower cap.
- No NCCs will be allowed once member balance reaches $1.6M.
The detail of each measure will only be known once draft legislation is published and the final outcome will only be known after Parliament considers the legislation.
There is no question that the complexity and flux in superannuation rules highlight the value that expert, independent advice can bring to individuals and families.
And this is where WARR HUNT comes in.
- We believe in achieving true financial independence, without reliance on Government support.
- We have always stressed the importance of maximising contributions, and despite these announcements, it is still better to have been maximising than not. With careful planning, nothing has changed.
- For those with longer timeframes, we have always embraced wealth accumulation in other structures, and utilised appropriate levels of gearing. This is now even more important.
- We free our clients from worrying about finances and investments, so they can focus on the things that really matter to them.
WARR HUNT can provide the right combination of structure and flexibility in your financial and wealth strategy to help you cope with policy change.
The outcome is a degree of comfort and security that you might otherwise miss if you attempted to navigate the policy maze all on your own.
If you have any questions, please contact us on 9935 0970 or at admin@warrhunt.com.au.