From 1 July 2017, the non-concessional contribution cap will decrease to $100,000 per annum. The bring forward provisions will remain in place and allow an individual who is 64 or less as at 1 July to bring forward a total amount of $300,000.
From 1 July 2017, the concessional contribution cap will reduce to $25,000 per financial year for everyone.
Transfer Balance Cap
From 1 July 2017, the Government will introduce a new Transfer Balance Cap (TBC). This will limit the tax concessions available to members with larger balances. The purpose of the TBC is to limit the total funds an individual can use to open an account based pension to $1.6 million. This will limit earnings and capital gains, which is currently tax free within an allocated pension.
This measure is set to be tracked by the Australian Taxation Office and the TBC amount will be indexed each year in increments of $100,000.
An individual who already has more than $1.6 million in pension phase will need to move excess funds back to accumulation or remove the excess from the superannuation system before 1 July 2017. There will be financial disadvantages for individuals who exceed this cap.
Defined Benefit Schemes
From 1 July 2017, the following measures will apply to Defined Benefit Schemes:
Contributions to a defined benefit scheme (as well as Constitutionally Protected Funds) will count towards a member’s concessional contribution cap.
Additional income tax will apply to income from a defined benefit income stream in excess of the income cap of $100,000 per annum.
A deduction cannot be claimed for a personal contribution made to certain defined benefit schemes (prescribed in the regulations).
To take advantage of these opportunities and see how they apply to your personal circumstances, contact us today and have a chat with Michael, Fred, Vanita or Robert.
285 St. Vincent St.
Port Adelaide SA 5015
Ph: (08) 8341 2411
Fax: (08) 8341 1490