Budget 2016: What are the new superannuation rules?
Big changes for superannuation are planned, but most only impact the very wealthy.
Currently, anyone who earns more than $300,000 a year pays 30% tax on concessional contributions (rather than 15%). As predicted, the Budget proposes to lower this to $250,000.
The level of concessional contributions (extra money you put into your super above employer contributions but which is still taxed at superannuation rates) will be capped at $25,000. You could still add extra funds, but you won't get any tax benefit from those contributions. There will also be a $500,000 cap on non-concessional contributions (which attract full "superannuation" tax but aren't taxed at the top marginal rate of 45 cents in the dollar).
As well, there will be a $1.6 million superannuation transfer balance cap on the total amount of superannuation that any person can transfer into retirement phase accounts. (Government figures say the income from $1.6 million is four times the current age pension, and that this will only affect 1% of superannuation holders.)
The Budget also proposes a new Low Income Superannuation Tax Offset, which will allow people on incomes of $37,000 or less to receive a refund of up to $500 on any tax paid on their super.
Who will this affect?
The Government says that 96% of individuals with superannuation won't be affected by the changes, and that less then 1% of superannuation users invest more than $500,000 in non-concessional benefits. The vast majority of Australians are unlikely to notice any changes.
When will the changes happen?
Like all Budget 2016 measures, these planned changes won't hit Parliament until after the expected 2016 election on 2 July. Superannuation changes are due to kick in for the 2017-2018 financial year. However, the $500,000 cap on non-concessional contributions is said to be in effect from tonight (3 May, and apparently doesn't require legislation.)
The Low Income Superannuation Tax Offset is also set to kick in on 1 July 2017.
Check out our full Budget 2016 guide for the other changes that will affect you. To learn more about superannuation generally, check out finder's superannuation guide.