Government changes super rules yet again
Just when you had adjusted to the proposed new super rules, the government has announced that the rules have changed, yet again!
Treasurer Scott Morrison and Minister for Revenue and Financial Services Kelly O'Dwyer released a statement last week detailing the government's backflip on its $500,000 lifetime non-concessional contributions cap.
The lifetime cap on non-concessional contributions has been scrapped to make way for a reduced annual cap.
Individuals can currently make non-concessional contributions of $180,000 per year or $540,000 over a three year period under the "bring forward" rule. From July 1, 2017, the cap will be lowered to $100,000 per year, or $300,000 over three years (only if you're under 65).
This change didn't come cheap. To offset this new $400 million hole in the budget, the government has decided against the harmonisation of the contribution rules.
If you're aged between 65 and 74 you will need to satisfy a work test (40hrs of work within a 30 day period each income year) to be able to make annual non-concessional contributions. However, you will not be able to bring forward your contributions.
The government have also decided to backdate the proposed catch-up of concessional contributions. Those with under $500,000 in super can hold unused contributions for five years, but this will now start from July 1, 2018.
What does this mean?
If you're a high income earner or have a self-managed super fund (SMSF), you should try and get your non-concessional contributions in before June 30, 2017. Under the current rules, you can bring forward a total after-tax contribution of $540,000 ($180,000 x 3). You'll be $240,000 better off if you act before the new financial year.
From July 1 next year, Australians under the age of 65 can contribute a total of $125,000 each year to their fund, and if taking advantage of the bring forward rule, up to $325,000 in any one year until they reach $1.6 million.