Superannuation retirement and tax

Superannuation, contributions, retirement and tax

seem to take up a lot of discussion and the changing laws keep many people confused about what are their rights and entitlements when they make contributions to their superannuation. Mr Andrew Proebstl chief executive of legal super writes in the June issue of the Law Institute Journal and provides a terrific summary of the rule changes. I add this to this week’s blog because of its importance.  He writes:

Anyone nearing retirement should be aware of the new superannuation and contribution caps. Significant changes to superannuation were announced on 3 May 2016 in the federal government budget. The key changes include:

Reduction in the annual cap on superannuation concessional contributions.

From 1 July 2017 the cap is $25,000 per annum, down from the current $30,000 for those under 50 and $35,000 for those 50 and over.

Catch-up concessional superannuation contributions.

From 1 July 2017 those with balances of $500,000 or less will be able to pay catch-up concessional superannuation contributions, subject to them having unused concessional contribution caps carried forward on a rolling basis for up to five years.

Doubling the tax on superannuation concessional contributions.

From 1 July 2017 those with more than $250,000 of income and superannuation contributions (currently $300,000) will pay 30 per cent tax on their concessional contributions, up from 15 per cent.The proposed new 30 per cent rate of tax is still less than the marginal rate of tax for earnings of more than $250,000.

Work-test restrictions removed for people aged 65-74.

From 1 July 2017 current work-test restrictions will be removed so that all those under 75 can make contributions and/or claim tax deductions for personal superannuation contributions to eligible superannuation funds.

Improving access to superannuation concessional contributions.

More Australians will be able to use their concessional contributions cap, with anyone under 75 able to claim an income tax deduction for concessional superannuation contributions to an eligible fund, up to the $25,000 concessional contribution cap.

Lifetime non-concessional superannuation contributions cap of $500,000.

The current annual non-concessional super contribution cap of $180,000 will be replaced by a lifetime cap of $500,000.Effective immediately, the new $500,000 cap will take into account all non-concessional contributions made on or after 1 July 2007.

Removal of tax exemption for transition to retirement (TTR) pensions.

From 1 July 2017 investment earnings of TTR pensions will no longer be tax exempt and will be taxed at up to 15 per cent (as is the case for investment earnings on superannuation assets). This change will apply regardless of when the TTR commenced.

$1.6 million superannuation transfer balance to retirement products cap.

From 1 July 2017 the government will introduce a $1.6 million cap on the total amount of superannuation an individual can transfer into retirement products, which includes superannuation pensions. The cap will be applied to current retirees and those who have yet to enter retirement. Current retirees with more than $1.6 million in retirement products (including superannuation pension) have until 1 July 2017 to either remove the excess or return it to an accumulation superannuation account, where tax of up to 15 per cent applies to investment earnings.


I continue, superannuation, death benefits and the nomination of beneficiaries in superannuation policies are all issues that we need to discuss. Then after we get it, we need to make our Will. I am constantly advising people about the huge benefits of testamentary trusts where you make provision for your children and grandchildren. Tax benefits for education and personal life requirements for certain classes of beneficiaries are just amazing. For more information you can visit the ATO web site on its discussion about contributions here https://www.ato.gov.au/Individuals/Seniors-and-retirees/Super/Contribution-caps/

Superannuation and contributions go hand in hand with all estate planning – have you done yours yet? Give me a call for a chat.