Superannuation – Conce
Effective from 7.30pm (AEST) 3 May 2016 the government has introduced a $500,000 lifetime cap for non-concessional contributions which is aimed at to limit the extent to which the superannuation system can be used for tax minimisation and estate planning. The lifetime cap will take into account all non-concessional contributions made on or after 1 July 2007. This will replace the existing non-concessional contributions cap of $180,000 per year (or $540,000 for individuals under 65 applying the bring forward rule).
If an individual has exceeded the cap prior to commencement date they will be considered to have used up their lifetime cap but not required to take the excess out of superannuation. However, if the a non-concessional contribution is made after the commencement date causing them to exceed the cap they will be notified by the ATO and must withdraw the excess from their fund to avoid penalty tax.
Effective from 1 July 2017 the cap on concessional contributions will reduce to $25,000 per year for everyone, regardless of age. The concessional contributions cap has been reduced from existing concessional caps of $30,000 for those aged under 50 years, and $35,000 for those aged over 50 years and over. Further, the current restrictions on people aged 65 to 74 before making superannuation contributions for their retirement will be removed, specifically, the current ‘work test’ will be removed from 1 July 2017.
Individuals with superannuation balances under $500,000 can begin to accrue and carry forward any unused additional concessional contributions where they have not reached their contribution cap in a previous year from 1 July 2017. Any unused cap amounts can be carried forward for up to five years and will give individuals the opportunity to ‘catch-up’ if they have capacity and choose to do so.
DISCLAIMER- The above information is general in nature, and must be tailored to your personal circumstances. The information is provided as a guide only.