How does the Budget affect my Super Fund?
Self Managed Super Funds will be affected by measures detailed in the 2016 Budget
The lifetime limit of $500,000 non-concessional contributions applies from 7:30 pm Budget night (03/05/2016). The limit includes all non-concessional contributions from 2007.
If you have exceeded the $500k in non-concessional contributions cap you will be unable to contribute more, however the funds over the cap will have no excess tax applied.
The $500k lifetime limit has replaced the 3 year bring forward rule and should stop most re-contribution strategies.
Transition to retirement (TTR) rules will change from 1 July 2017. The result is that the savings in Super funds of tax free earnings in the TTR period will be removed. This effectively removes the benefits of a TTR strategy from July 2017
Maximum Superannuation Pension balances from 1 July 2017 will be $1.6 million per member.
If the balance in pension mode is above the $1.6m cap at 1 July 2017, then the excess amount will need to be withdrawn from Superfund or transferred to accumulation phase. The earning on super will then be taxed at 15%.
We have 14 months to make sure Superfunds with balances of more than $1.6 million are set up in the most tax effective manner.
Concessional Contribution Caps will be reduced from 1 July 2017 to $25,000.
The Budget is aiming to limit the tax effectiveness of Superannuation, without losing to many votes.
Please note that this Budget has been announced, it does however still need to be passed by both houses of Parliament and some items may change prior to legislation being passed. It may also be effected by a change in government or major shifts in the Senate.