Date of article: 3 July 2017
Last updated: 3 July 2017
Tax deduction for personal super contributions
Self-employed and those that earn less than 10% of their income from salary or wages can claim a tax deduction for personal contributions they make to super.
On 1 July 2017, the 10% rule was removed. Everyone can claim a tax deduction in their personal tax return for personal contributions they make to super.
Reduction in concessional contributions cap
On 1 July 2017, the concessional contributions cap reduces to $25,000 per financial year for everyone.
Concessional contributions includes employer contributions, salary sacrificed amounts, and amounts that a tax deduction was claimed on those contributions.
Non-concessional contributions cap reduced
From 1 July 2017, the non-concessional contributions cap has been reduced to $100,000 per financial year.
Additionally, the eligibility to make non-concessional contributions is subject to your total superannuation balance being less than $1.6m.
The bring-forward is still available if you are under age 65, where you can bring forward two years cap. The amount of bring-forward you can access may be limited by your total superannuation balance.
The bring-forward is subject to transitional measures due to the reduction of the cap from $180,000 to $100,000 if you have triggered the bring-forward prior to 1 July 2017.
Limit on exempt pension income
From 1 July 2017, a new cap will be introduced to limit the amount of superannuation capital that can be transferred to the retirement phase (the transfer balance cap). This cap will limit the amount of the earnings that are exempt from taxation in retirement phase. The transfer balance cap is $1.6m.
The amounts above the transfer balance cap remains in accumulation phase, and the earnings on assets in accumulation phase is taxed at normal rates of 15%.
Transition to retirement income stream
From 1 July 2017, the earnings on Transition to retirement income stream (TRIS) assets will no longer be exempt from income tax as it is treated as accumulation phase assets. Normal rate of tax on earnings applied.
Div 293 – high income earners
Division 293 tax threshold will be reduced from $300,000 to $250,000 from 1 July 2017. An additional 15% tax on concessional superannuation contributions is imposed on high income earners.
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