The 2016 Federal Budget is in

Tuesday, 3 May 2016

The Federal Government has now passed its super reform legislation. View changes taking effect from 1 July 2017.

The Federal Government tonight announced a number of changes to super as part of the 2016 Budget.

Treasurer Scott Morrison said the objective of the changes is to have a system which encourages all Australians to save and not be dependent on the age pension in retirement.

Some of the announcements include:

  • A $1.6 million superannuation transfer balance cap will be introduced on the total amount of superannuation that an individual can transfer from an accumulation account to a retirement account.
  • Those with combined incomes and superannuation contributions greater than $250,000 will pay 30 per cent tax on their concessional contributions, up from 15 per cent.
  • The concessional contributions cap will be lowered to $25,000 per year. However, individuals with balances less than $500,000 will be provided scope to make “catch‑up contributions”.
  • A $500,000 lifetime cap for non-concessional contributions will be introduced with immediate effect.
  • The Government will also introduce a Low Income Superannuation Tax Offset which will continue to support the accumulation of superannuation for low income earners.
  • Changes are also proposed to the taxation arrangements for transition to retirement income streams.
  • Restrictions on the ability of Australians aged between 65 and 74 to contribute to superannuation will be lifted by removing aged based contribution rules.

It is important to note that the majority of the changes are not scheduled to take effect until 1 July 2017, and of course are dependent on their passage through Parliament.

The Government states that 96 per cent of Australians with super would be unaffected or better off as a result of changes announced tonight.

We will be working hard over the coming days to analyse the changes to work out what they mean for you and your super.

Stay tuned.