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For those of you who might be affected by the changes, here’s a summary of some of the key changes coming into effect on July 1:
The annual cap for concessional (pre-tax) contributions will be reduced to $25,000 for everyone, regardless of age. This is down from $30,000 for those under 49 at 30 June 2016 and $35,000 for anyone older.
The annual cap for non-concessional (after-tax) contributions will drop from $180,000 to $100,000 a year. People aged under 65 will still be able to make three years of non-concessional contributions in a single year, but at the new lower rate (up to $300,000 compared with the current maximum of $540,000).
Once your total superannuation balance hits $1.6 million, you’re no longer eligible to make non-concessional contributions.
The total amount of accumulated super that you can transfer into “retirement income streams”, including account-based pensions where earnings on assets are tax-free, will be capped at $1.6 million. This will apply to both current and new retirement income streams.
Earnings on assets supporting transition to retirement pensions will be taxed at up to 15 per cent instead of being tax-free.
This provision currently allows some super funds to claim a tax deduction for a portion of lump sum death benefits paid to eligible dependants, which effectively allows a larger death benefit to be paid.
It’s important to know that these are just some of the changes – if you haven’t done so already, it’s worth speaking to your financial adviser as soon as possible to assess whether you need to make any changes to your financial strategy or your SMSF.
For more information from the ATO about the changes to superannuation rules, click here.
For specific information from the ATO on the changes for SMSFs, click here.