by Gemma Kovaloff, Rosenfeld Kant SMSF Division, ASIC Authorised Rep No: 0001250846

2016 was a very big year for superannuation and SMSFs. It’s now 9 months since shock waves were sent through the super industry, with the announcement of significant changes to the super rules. Also in 2016 the ‘accountants’ exemption’ (Corporations Regulations (2001)) was removed with the result that accountants must now be licensed in order to give SMSF advice. Together these changes will have far-reaching affects for all generations of Australians.

To help you understand what this all means for you, I have written a three-part series of articles to:

  • Summarise the main changes to the superannuation legislation;

  • Delve deeper into the changes to the contribution cap & rules;

  • Look more closely at the pension changes; and

  • Outline our new SMSF advice delivery services and how we can help you to navigate the new super

    landscape within your SMSF.

Here is Part 1, a list of key super changes to help you determine the areas which affect you and where we can assist:

Superannuation & Self-Managed Superannuation Funds (SMSF) Series

Part 1 of 3: Summary of key super changes

Changes to Contributions taking effect from 1 July 2017

Concessional contribution cap
Concessional Cap will be reduced to $25,000 per annum for all eligible members.  Member of defined benefits schemes may be deemed to have made notional concessional contributions.

Non-concessional contributions
The Non-concessional cap will be reduced to $100,000 per annum for all eligible members.   The three year bring forward rule will remain but will result in a $300,000 maximum.  There will be transitional rules for members who trigger the brought forward amount in the 2016 or 2017 years. Only members with balances under $1.6M at 30 June can make non-concessional contributions.

Tax deduction for personal super contributions
All eligible taxpayers will be able to claim a deduction for a personal super contribution.  An exemption applies to all Commonwealth Government defined benefit schemes.

Lower threshold for higher super contributions tax
The income threshold for this additional 15% tax on contributions will be decreased to $250,000.

Spouse contribution tax offset
The income threshold for the full offset will be raised to $37,000, with shading out on incomes between $37,000 to $40,000.

Low income super tax offset (LISTO)
This offset, previously know as he Low Income Super Contribution (LISC)  (tax refund) will remain.  It is capped at $500 and will be paid when ‘adjusted taxable income’ is less than $37,000.

Changes to Contributions taking effect from 1 July 2018

Catch-up of concessional contribution cap
If your Total Super Balance is less than $500,000 on the previous 30 June, you can use up to 5 years of unused concessional contribution caps.

Changes to Pensions taking effect from 1 July 2017

$1.6M transfer balance cap (TBC)
This new per-member account tracks and limits the amount of super assets that can be moved into pension phase that generates tax-free earnings.

Defined benefit income cap
the maximum tax-free amount of a defined benefit income stream will be worked out with reference to the TBC. Initially this will be the TBC divided by 16 (or $100K tax-free).

Transition to retirement Income Streams (TRIS)

Income from assets supporting the payment of a TRIS will no longer be tax free.

Capital Gains Tax (CGT) concessions
Super funds will be able to uplift cost bases on pension assets to market value

Other Changes taking effect from 1 July 2017

Anti-detriment payments
These payments will no longer be available for the death of a member that occurs except where a member died before 1 July 2017 and the payment is made before 30 June 2019.

I invite you to contact me if you require assistance to understand how the changes apply in your own circumstances and for advice on what you need to do next. Please email gemma@roskant.com.au or phone (02) 9375 1200.

Superannuation & SMSF Series
1: Summary of key super changes | 2: Contributions caps, thresholds & Rules | 3: Pensions

Gemma Kovaloff is Senior Manager with Rosenfeld Kant SMSF Division, ASIC Authorised Rep No: 0001250846

The information (including taxation) contained within this article is of a general nature only and neither represents nor is intended to be personal advice on any particular matter. Rosenfeld Kant strongly suggests that no person should act specifically on the basis of the information in this document, but should obtain appropriate professional advice based on their own personal circumstances.