Federal Budget announces changes to super

Another Federal Budget is behind us with the seemingly inevitable round of changes to super. Assuming the legislation is passed, we look at the key changes that could impact you.

How much we can add to super

Starting 1 July 2017, before-tax (concessional) super contributions will be cut to $25,000 annually – regardless of age. That’s down from $30,000 at present, or $35,000 if you’re over 50. This limit includes your employer’s compulsory super contributions.

If you have less than $500,000 in super, and you don’t contribute the full $25,000 in a single year, you will be able to carry over the unused amount for the following five years. It’s a plus for workers who take time off to raise a family or act as a carer.

Effective 3 May 2016, we will be limited to a lifetime total of $500,000 in after-tax (non-concessional) super contributions. This will include all non-concessional contributions made on or after 1 July 2007. Contributions made after commencement that exceed the $500,000 cap will need to be returned or be subject to penalty tax.

Higher contributions tax for high income earners

The 30% tax that currently applies to before-tax super contributions if you earn over $300,000 annually, will be extended to those on annual income of $250,000 or more.

Good news for low income earners

From 1 July 2017, workers earning less than $37,000 annually will be eligible for a refund of up to $500 on super contributions tax, helping low income earners save for retirement.

More generous spouse super tax offset

The maximum income level for the spouse super tax offset is being expanded. If your spouse/partner earns less than $37,000 annually (currently $10,800) you can claim a tax offset of up to $540 when you make a contribution to his or her super fund.

Contact your local financial adviser today to discuss any of the proposed changes in more detail and how they could affect your super strategy.

Talk to your local financial adviser today

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