The prospect for superannuation reforms was announced by Treasurer Scott Morrison when he announced the 2016-2017 Budget earlier this year. On 23 November 2016, the Treasury Laws Amendment (Fair and Sustainable Superannuation) Bill 2016 and the Superannuation (Excess Transfer Balance Tax) Imposition Bill 2016 were passed by both Houses of Parliament. Most reforms will commence on 1 July 2017.
The proposed changes include:
- the introduction of a superannuation transfer balance cap of $1.6 million which is the amount that may be transferred into the tax-free pension account;
- reductions in the concessional and non-concessional contribution caps;
- reduction of the threshold at which high-income earners will have to pay additional contributions tax from $300,000 to $250,000;
- allowing transitional capital gains tax relief for funds that modify their asset allocations before 1 July 2017;
- the introduction of catch up concessional contributions and an excess transfer balance tax;
- the removal of the outdated anti-detriment deduction; and
- the removal of the earnings tax exemption relating to Transition to Retirement Pensions.
Given the imminent changes, you may need to seek legal advice regarding how the reforms will impact your superannuation. Our experienced Estate Planning team will be able to consider your circumstances and provide you with the appropriate advice.