Super continues to be a tax-effective structure in which to hold investments for retirement savings. The super reforms of May 2017 imposed tighter caps and rules on the amount and timing of contributions. It’s now more important than ever to plan over the longer term to boost retirement savings within the new rules. Changes around super contributions which take effect in the 2018-2019 financial year include:
- The concessional contribution (CC) cap of $25,000 applies to everyone, regardless of their age and existing super.
- From 1 July 2018 eligible people can make ‘downsizer contributions’ of up to $300,000 without impacting the contribution caps. Click here to read our blog on downsizer contributions.
- An individual can now accrue unused amounts of the CCs cap and carry-forward these unused amounts. The first year in which a person can make additional CCs towards their accrued amount is 2019-2020. This provision can only be used by a person whose super balance is under $500,000 as at 30 June of the year prior. This provision allows “catch-up” CCs when the opportunity arises (eg. for a woman returning to work after a career-break to raise a family). Unused amounts are available for a maximum of 5 years.
- Under the First Home Super Saver Scheme, individuals will be able to apply to withdraw voluntary contributions made to super after 1 July 2017 for a first home. Voluntary contributions include non-concessional, concessional and salary-sacrifice contributions.