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May 14th, 2018
The government has made a number of changes to superannuation this financial year, which are designed to improve the system for all Australians.
While these changes may not affect you now, it’s important to be aware of them should your circumstances change in the future.
Recent major changes to the super system include:
Changes affecting spouse contributions
What’s changed?
From 1 July 2017, the spouse income threshold increased to $37,000* from $10,800. This means, more people are now eligible to claim a tax offset of up to $540 when contributing to the super fund of their spouse whose income is $37,000 or less.
*The contributing spouse of a person earning more than $37,000 but less than $40,000 may still receive a diminishing proportion of the tax offset.
Who benefits?
Individuals with an income of $37,000 or less can grow their super and their contributing spouse receives a tax deduction.
New low income super tax
What is it?
The new low income super tax offset (LISTO) policy replaces the low income superannuation
What is it? The new low income super tax offset (LISTO) policy replaces the low income superannuation contribution (LISC) policy from 1 July 2017.
Individuals who earn $37,000 or less may be eligible to receive a payment equal to 15% of total annual concessional (pre-tax) super contributions each year, capped at $500. First Super must have your tax file number for you to receive the repayment.
Changes to eligibility for co-contributions
There is now added eligibility criteria for co-contributions. In addition to existing criteria, individuals must also have a super balance less than the transfer cap balance of $1.6 million (for the 2017-18 financial year) at 30 June in the previous financial year, and must not have a super balance less than the transfer cap balance of $1.6 million (for the 2017-18 financial year) at 30 June in the previous financial year, and must not have contributed more than their non-concessional contribution cap.
Changes to concessional contributions cap
What’s the change?
Effective from 1 July 2017, the Commonwealth Government reduced the concessional contribution cap for individuals to $25,000 per year, irrespective of age. Previously, people under the age of 49 could contribute up to $30,000 per year, and people 49 or over, $35,000 per year.
Who is affected?
Those who exceed the concessional contributions cap of $25,000 this financial year, may incur a tax debt known as an excess contribution charge. These changes may require individuals to review and adjust their pre-tax contributions.
Introduction of total super balance
What does this mean?
Effective from 30 June 2017, this is a new way of valuing an individual’s total super interests at a given point in time. A total super balance is important to know when calculating eligibility for a range of benefits and policies including non-concessional contributions cap, government co-contributions, applicable tax offsets and more.
Changes to non-concessional contributions cap
Effective 1 July 2017, the non-concessional contribution cap is $100,000, reducing from $180,000.
Individuals with a total superannuation balance of $1.6 million at 30 June in the previous financial period have a non-concessional cap of nil – meaning, any additional non-concessional contributions may be taxed at the individual’s marginal rate.
Under the policy, those under 65 years may be eligible for the bring-forward rule, which allows an individual to make non-concessional contributions up to three times the annual cap limit, effectively borrowing the cap from two consecutive future years.
Don’t die wondering…
Nominate or update your beneficiaries today!
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Contact 1300 360 988 or login at firstsuper.com.au to nominate, update or confirm your beneficiaries.
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