On 15 September 2016, Treasurer Scott Morrison announced changes to a number of 2016 Budget superannuation measures. These include both good and bad news.
- A $500,000 lifetime non-concessional contribution cap will not proceed.
- The annual non-concessional contribution cap drops from $180,000 to $100,000, expected to apply from 1 July 2017.
- While under 65, a person can still bring forward three years’ non-concessional contributions.
- After 1 July 2017, non-concessional contributions will not be allowed once a person’s superannuation balance has reached their transfer balance cap (currently proposed at $1.6 million).
- The work test for people over 65 to make contributions will remain.
- The ability to ‘catch up’ concessional contributions not made in prior years has been delayed to 1 July 2018.
These announcements will have to be considered when making or planning superannuation contributions, and particularly whether:
- non-concessional contributions should be made before 30 June 2017 to maximise the $180,000 annual limit before it becomes $100,000; and
- to contribute $540,000 before 30 June 2017 to access the current bring forward cap rather than being limited to the new lower bring forward cap (or the transitional arrangements).
As with all superannuation changes, we will not know the details of how these will operate until we have legislation, and particularly the transitional rules, which are not discussed in the announcement.
However, care must be taken in the interim to take into account these proposals.