The theme of this year’s pre-election Budget is “jobs and growth” with the Government seeking to transition the economy from the resource boom to a more diversified economy.
Social security and aged care remained largely unchanged in this Budget, both having undergone major reforms in recent years.
For clients of 5 Financial, the reforms regarding superannuation are likely to be the main area of interest.
While these are the main points to be taken away, they remain proposed until ratified by the Senate.
Key changes announced were:
· Reduction in annual concessional contribution caps from to $25,000 (currently $30,000 for under 50’s and $35,000 for over 50’s), but an ability to carry forward unused caps
· A lifetime non-concessional contribution cap of $500,000 to replace the annual caps and bring-forward rules
· A limit on pension phase balances of $1.6million per person (for new and existing income streams)
· Superannuation contributions tax doubled for those earning between $250,000 to $300,000 per year
· Super tax rebate for those earning less than $37,000 a year
· Ability for Australians under 75 to make contributions to super (currently people over 65 have to meet a work test)
· Individuals up to age 75 can claim a tax deduction on contributions
· Reductions in small business company tax rates and increased turnover thresholds to qualify
· Increased eligibility for the spouse super tax offset (spouse can now earn up to $37,000 up from $10,800)
· Removal of earnings tax exemptions for transition to retirement income streams
· Removal of anti-detriment (On a death benefit claim on behalf of a deceased member of a super fund, a refund of the 15% contributions tax paid by the deceased member throughout their life was previously payable to certain beneficiaries – called an anti-detriment payment)
As to be expected in an election year, most of the reforms announced will not take effect until 1 July 2017, although changes to non-concessional contributions are effective immediately (legislation pending).
If you are interested in knowing more about how the changes may affect you, we would be happy to assist you. Book a free consultation with one of our experienced wealth advisers today.
This information is of a general nature and does not constitute legal or financial advice. We recommend that you seek professional advice specific to your circumstances and goals before taking action.