Gov't Backflip...500k Non-Concessional Super Limit Axed!
In the recent federal budget the government proposed to put a lifetime cap of $500k on the amount someone could have in non-concessional contributions. This was a major blow to many people who had already reached the limit of 500k. It meant they could not contrinute any further non-concessional amounts and would be limited to making only concessional contributions of $25k per annum.
The government have now done a major backflip and come up with an alternative, which was braodly welcomed by the superannuation industry.
A brief summary of the changes are as follows:
- The 500k lifetime limit on non-concessional contributions will be axed!
- The Government will instead reduce the existing annual non- concessional contributions cap from $180,000 per year to $100,000 per year deferred to 1 July 2018.
- Individuals aged under 65 will continue to be able to ‘bring forward’ three years’ worth of non-concessional contributions i.e. you will be able to make $300,000 as a lump sum and then not contribute for 3 years.
- Individuals with a superannuation balance of more than $1.6 million will no longer be eligible to make non-concessional (after tax) contributions from 1 July 2017.
- With their annual concessional contributions of $25,000 p.a. Australians will be able to contribute $125,000 each year and, if taking advantage of the non-concessional ‘bring forward’, up to $325,000 in any one year until such time as they reach $1.6 million.
- Individuals aged 65 to 74 who satisfy the work test will still be able to make additional contributions to superannuation. This will encourage individuals to remain engaged with the workforce which is of benefit to the economy more generally.
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