The Senate has passed the key Bill which gives effect to the much-discussed superannuation reforms.

Summary of measures

The Treasury Laws Amendment (Fair and Sustainable Superannuation) Bill 2016 contains the measures originally announced in the 2016/17 Federal Budget with subsequent amendments. The Bill was passed as introduced to Parliament without any changes. The majority of measures commence from 1 July 2017.

The key measures include:

  • Introducing a $1.6 million transfer balance cap which limits the amount that can be transferred to the retirement phase, where earnings are tax-free. This measure will also apply to death benefit income streams.
  • Reducing the concessional contributions cap to $25,000 for all taxpayers.
  • Introducing a concessional contributions catch-up regime for those with total super balances of less than $500,000 from 1 July 2018.
  • Allowing a deduction for personal contributions without testing the proportion of employment income received (the 10% test).
  • Reducing the non-concessional contribution cap to $100,000 pa (or $300,000 under the bring forward provisions), limiting the ability to make NCCs to people who have a total superannuation balance of less than $1.6 million and introducing transitional rules for those who triggered the bring forward rule prior to 1 July 2017.
  • Introducing a low-income superannuation tax offset to replace the low income superannuation contribution (which will be abolished from 1 July 2017).
  • Increasing the annual income threshold from $10,800 to $37,000 for eligibility for the spouse contribution tax offset.
  • Abolishing the anti-detriment payment (an additional payment made to certain beneficiaries of a deceased fund member, as part of the death benefit claim).
  • Removing tax exempt earnings for transition to retirement income streams.
  • Lowering the income threshold for Division 293 tax to $250,000.

Next steps

The Bill will now need to receive Royal Assent before it is formally law.

This is generally accepted to be a mere formality.

Over forthcoming updates, we will delve into the detail of key areas, including:

• Concessional contributions
• Non-concessional contributions
• Transition to retirement pensions, and
• $1.6 million pension balance transfer cap.

In the meantime, if you have specific questions or concerns relating to the impacts of the reforms, contact McEwen Investment Services on 1300 623 936

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