Superannuation Changes 2017
The changes to the superannuation contributions effective 1 July 2017 represent a move by the Federal Government to increase revenue by reducing tax concessions.
To best understand these changes and what they mean to you, it’s firstly, worth having a look at the current superannuation contribution arrangements, so we can gain some perspective.
Until 30 June 2017 the following superannuation contribution caps apply;
- A maximum concessional contribution of $35,000.
Concessional contributions are those where you can claim a tax deduction or there is some tax advantage applicable.
- A maximum non concessional contribution of $180,000.
Non concessional contributions to your super are not taxed when they go into your super fund, but do not come off your tax return, meaning they do not attract any tax advantage.
An important thing to note with regard to non concessional contributions is that you have the option of using a “bring forward” provision, where you can bring forward the following 2 years of contributions as well. Therefore, the current cap for non concessional contributions is $540,000 when using a bring forward provision.
From 1 July 2017 the following changes to superannuation contributions will apply;
- A maximum concessional contribution of $25,000.
- A maximum non concessional contribution of $100,000. This also means that non concessional contribution cap under a bring forward provision will fall from $540,000 to $300,000.
So what does this 2017 superannuation change mean for me?
There are two key situations where these changes may affect you;
- If you are considering making a large contribution to your super, you may wish to take advantages of the current contribution concessions before they are reduced from 1 July 2017.
- If you currently have a salary sacrifice arrangement in place, the change to the concessional contribution cap down to $25,000 may require a review of your salary sacrifice.
Are there any other changes effective 1 July 2017 that may affect me?
Two other areas of change that might be of interest to you are;
- Firstly, if you are currently in a transition to retirement pension, it may be worth reviewing your situation to see whether you retain this pension for the long term or you revert back to an accumulation phase. This is due to the change in tax benefits associated with transition to retirement pensions.
- Secondly, if you currently have an allocated pension fund in place, concessional tax advantages will only apply to these funds up to a level of $1.6m.
What should I do between now and 1 July 2017?
If you feel that any of these 2017 superannuation changes may apply to you, it is strongly recommended you talk to a financial advisor.
Johnston Grocke have financial advisors well placed to help you determine whether any of these changes to contribution caps will affect you, and if so, your best options moving forward.
So for peace of mind call Johnston Grocke today on 83030300.