The $500,000 lifetime limit on personal (non-concessional) superannuation contributions announced in the Federal Budget has been scrapped with the Government recently announcing a change of tack.
As part of the Federal Budget handed down on 3 May 2016, the Government announced that they would introduce a $500,000 lifetime cap on personal (non-concessional) superannuation contributions.
Since budget night, this measure has drawn significant criticism with many pointing out the retrospective nature of the change, and a number of other practical problems associated with its implementation.
In light of the public reaction, the Government has gone back to the drawing board with the Treasurer and Minister for Revenue & Financial Services recently issuing a joint media release flagging a change of tack.
Instead of a $500,000 lifetime cap, the Government now intends to reduce the existing annual personal contributions cap of $180,000 to $100,000 from 1 July 2017. They also intend to prohibit people with super balances in excess of $1.6m making personal contributions.
The Government have also announced that they will not proceed with the removal of the “work test” which must be satisfied by people who are age 65 – 74, when seeking to make personal contributions. The deductible (concessional) contributions catch-up measure start date will also be deferred to 1 July 2018.
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Given the contentious nature of the proposed changes, it is likely that the debate will continue and that there will be further alterations made before the measure becomes law.
We will keep you posted as the measure makes its way through the legislative process. In the meantime, please contact us if you would like assistance to understand how the proposed changes will affect you and the planning opportunities that exist.
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