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2016/17 Federal Budget - changes to super

Disclaimer: This information is intended to give an overview of the Federal Government's changes to super. The information is of a general nature and does not take into account a member's specific circumstances. The information explains how the changes may impact members and you may wish to review your existing arrangements in light of the changes. However, before making any decisions, we recommend that you carefully consider your own position and requirements including where appropriate seeking professional advice. The information is correct as at 3 March 2017.

The Federal Government has made a number of changes to the rules relating to super. These changes were initially announced in the 2016/17 Federal Budget and then amended following public consultation. The legislation giving effect to the changes has passed through Parliament and is now law.

Most of the changes will take effect from 1 July 2017. The changes will apply to members of each of the Gold State Super, West State Super, GESB Super, Retirement Income and WA State Pension Schemes. 

An overview of the changes is set out below. After each summary you will find links to both government and GESB fact sheets which provide further background information. To learn more about how these changes may impact your super or retirement accounts with us, register for our 30-minute webinar, Understanding the 2016/17 Federal Budget changes to super. For a complete discussion of the Federal Budget super changes, visit the Department of Treasury Superannuation Reforms website

The 2016/17 budget super changes include:

 

Eligibility for tax deductions for personal super contributions

Who will be affected?

West State Super and GESB Super members

When?

From 1 July 2017

What will change?

  • West State Super members will no longer be eligible to claim a tax deduction for personal super contributions made after 30 June 2017 to West State Super.
  • GESB Super members under the age of 65, and those aged 65 to 74 who meet the work test (i.e. you work 40 hours within a 30-day period each income year), will be able to claim a tax deduction for personal super contributions made to GESB Super up to the concessional contributions cap. The existing restriction of tax deductions for personal contributions to those who earn less than 10% of their income from salary or wages will be removed.

More information

 

Lowering the annual concessional contributions cap

Who will be affected?

GESB Super, West State Super, Gold State Super and WA State Pension Scheme members

When?

From 1 July 2017

What will change?

  • For GESB Super, the annual concessional (before-tax) contributions cap will be lowered to $25,000 (it is currently $30,000 for those aged under 49 at the end of the previous financial year and $35,000 otherwise).
  • Concessional contributions to West State Super and Gold State Super are not limited by the annual concessional contributions cap and this remains unchanged. However, concessional contributions made to West State Super or Gold State Super will be included in the annual contributions cap (for the purposes of determining the remaining annual cap available to a member in their taxed super funds).
  • Likewise, notional employer contributions to the WA State Pension Scheme will count towards the $25,000 cap for concessional contributions to taxed schemes.

More information

 

Allowing 'catch-up' concessional contributions

Who will be affected?

GESB Super members

When?

From 1 July 2018

What will change?

  • From 1 July 2018, members who have not used their full concessional (before-tax) contributions cap, with super account balances of less than $500,000 may be able to make 'catch-up' concessional contributions.

More information

 

Lowering the annual non-concessional contributions cap

Who will be affected?

GESB Super, West State Super and Gold State Super members

When?

From 1 July 2017

What will change?

  • The annual non-concessional (after-tax) contributions cap will be lowered to $100,000.
  • Members with a super account balance of $1.6 million or more will no longer be eligible to make non-concessional contributions.
  • Members under age 65 will still be eligible to bring forward up to three years of non-concessional contributions. However, any amounts brought forward from 1 July 2017 will reflect the reduced annual cap.
  • Members with account balances close to $1.6 million will only be able to bring forward the annual cap amount for the number of years that would take their balance to $1.6 million. 
  • Transitional arrangements will apply for members who have made a non-concessional contribution in 2015/16 or 2016/17, but have not fully used their bring forward before 1 July 2017. For example, for amounts brought forward from 2015/16, the transitional cap will be $460,000 (the annual cap of $180,000 from 2015/16 and 2016/17, and the $100,000 cap in 2017/18), and for amounts brought forward from 2016/17, the transitional cap will be $380,000 (the annual cap of $180,000 in 2016/17, and $100,000 in 2017/18 and 2018/19).

More information

 

Introducing a $1.6 million cap on transfers from super to pensions

Who will be affected?

GESB Super, West State Super, Gold State Super, Retirement Income and WA State Pension Scheme members

When?

From 1 July 2017

What will change?

  • A new $1.6 million cap will apply on the total amount of super that can be transferred to a tax-free retirement account.
  • Retirement savings over $1.6 million can remain in a super accumulation account or be invested outside of super.
  • Members already retired with balances below $1.7 million on 30 June 2017 will have six months from 1 July 2017 to bring their retirement account balances under $1.6 million.
  • This cap won't apply to transfers to Transition to Retirement pension accounts.
  • For members of the WA State Pension Scheme, upon payment of their pension, the 10% tax offset will only apply for up to $100,000 gross pension per year.
  • For members of the WA State Pension Scheme, a factor of 16 is applied to the gross value of their pension to work out whether they are eligible to add more lump sum amounts to a retirement account. For example, if a member's gross pension is $80,000 per annum and they have used $1,280,000 (16 x $80,000) worth of the available $1.6m, then they can add another $320,000 to a tax-free retirement account.

More information

 

Lowering the income threshold for Division 293 tax for high income earners

Who will be affected?

GESB Super, West State Super and Gold State Super members

When?

From 1 July 2017

What will change?

  • The threshold at which high-income earners pay additional tax on their concessional contributions (Division 293) will be lowered from $300,000 to $250,000 per annum.

More information

 

Removing the anti-detriment rule for the payment of death benefits

Who will be affected?

GESB Super and Retirement Income members

What will change?

  • The anti-detriment provision for the payment of death benefits will be removed (the provision will still apply where death occurs before 1 July 2017 and the death payment is made before 1 July 2019)

More information

 

Extending the spouse tax offset

Who will be affected?

GESB Super and West State Super members

When?

From 1 July 2017

What will change?

  • For contributions made in the 2017/18 financial year (and later years) eligibility for the tax offset for spouse contributions will be extended to those whose recipient spouses earn up to $40,000 (and whose spouse has not exceeded their non-concessional contributions cap or their balance is not $1.6 million or more).
  • The tax offset, up to $540, is currently available to people who make super contributions to their spouses with incomes up to $10,800.

More information

 

Renaming the low income super contribution (LISC)

Who will be affected?

GESB Super and West State Super members

When?

From 1 July 2017

What will change?

  • The low-income superannuation contribution (LISC) will be known as the 'low-income superannuation tax offset (LISTO)'.
  • West State Super members will continue to be ineligible to receive the LISC or LISTO.

More information

 

Taxing earnings from Transition to Retirement pensions

Who will be affected?

Retirement Income members

When?

From 1 July 2017

What will change?

  • Investment earnings on Transition to Retirement pensions will no longer be tax exempt. From 1 July, these earnings will be taxed at a concessional rate of up to 15%, regardless of when the Transition to Retirement pension started.
  • We will no longer automatically transfer Transition to Retirement members to our Retirement Income Allocated Pension when they reach age 65. Members will need to apply to open a Retirement Income Allocated Pension and be aware of the $1.6 million transfer cap.
  • Members will also no longer be allowed to treat certain super income stream payments as a lump sum for tax purposes.

More information

 

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