Budget measures

The Government’s changes to the Australian superannuation system have been designed to “enhance stability in the superannuation system”, legislating that the primary objective of the superannuation system is “to provide income in retirement to substitute or supplement the Age Pension” [1].

The following measures have been introduced as part of the reform package. Select the links below for further explanations of each measure.

Transfer Balance Cap

The Transfer Balance Cap (TBC) is a limit that will apply to the total amount of superannuation that can be transferred into a superannuation income stream or pension product (a ‘retirement phase account’).

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Tax on Concessional Contributions

The current Division 293 threshold is $300,000 until the end of the 2016-17 financial year. This threshold will be lowered to $250,000 from 1 July 2017.

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Super Concessional Contributions Caps

The concessional contributions cap will reduce to $25,000 per annum for everyone regardless of age from 1 July 2017.

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Non-Concessional Contributions Cap

An annual cap of $100,000 will replace the current $180,000 cap from 1 July 2017. Additionally, non-concessional contributions may only be paid where the members account balance is less than $1.6 million.

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Tax Exemption on Earnings of Assets Supporting Transition to Retirement Income Streams

Removing the tax exemption on earnings of assets supporting Transition to Retirement Income Streams from 1 July 2017.

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Deductibility of personal contributions

The criteria for deductibility of personal contributions will be extended to all individuals from 1 July 2017.

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Work Test Rules

Removing the work test for individuals aged from 65 to 74 years of age to make superannuation contribution rules.

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Low Income Super Tax Offset

A new Low Income Superannuation Tax Offset (LISTO) will replace the Low Income Superannuation Contribution (LISC) from 1 July 2017.

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