Guide to super changes, Age Pension cuts, bring-forward rule, unpaid SG, Reader Comment of the Year
Highlights of the DECEMBER 2016 newsletter include:
- AGE PENSION JANUARY 2017 CHANGES: LATEST COMMENTS FROM READERS, INCLUDING SUPERGUIDE 2016 READER COMMENT OF THE YEAR. A must-read for lessons on how not to introduce a policy. An extremely negative reaction from readers towards the Age Pension changes, which is likely to influence the next federal election. Also, see same link below for the Reader Comment of the Year.
- SUMMARY: 2016 FEDERAL BUDGET SUPERANNUATION CHANGES NOW LAW. The July 2017 super changes affect all Australians saving for retirement, or currently in retirement. See link below. You can also access detailed articles on all key policies at end of this newsletter.
- SUPERANNUATION CHANGES: WHAT RULES APPLY FOR 2016/2017 YEAR? Many of the big-ticket super policies are not changing, and many of the super changes will not apply for the 2016/2017 year. See link below.
- NON-CONCESSIONAL CONTRIBUTIONS: 10 FACTS ABOUT NEW $100,000 CAP. A handy guide to the new rules. See link below.
- DEFINED BENEFIT FUNDS AND THE $1.6 MILLION TRANSFER BALANCE CAP. Due to reader requests, we have prepared a summary for DB fund members. Yes, it will hurt your brain but it’s essential information if you’re a member of a DB fund. For general information on the $1.6 million cap, see separate link below.
- LATEST RETIREMENT DEAL! LOSE AGE PENSION, RECEIVE SENIORS HEALTH CARD. More than 330,000 Australians are immediately hit by the radical Age Pension changes taking effect from 1 January 2017. We have updated all relevant articles to explain and reflect these changes. See link below to find out more.
- UNPAID SUPER: SHOULD THE ATO CHASE MORE SLACK EMPLOYERS? Some employers don’t pay Superannuation Guarantee contributions, and it seems the government is allowing them to get away with it. In a related article, discover why many Aussies may miss out on SG increases.
- SUPERANNUATION TAX: ‘WORKING HOLIDAY MAKERS’ HIT WITH 65% BENEFITS TAX FROM JULY 2017 New rules impose a hefty tax on super benefits when these ‘working holiday makers’ leave the country, and apply for a Departing Australia Superannuation Payment.
- UPDATED 2016/2017 CONTRIBUTIONS GUIDES. For your convenience, we have updated our 3 main contributions guides to help you navigate the contribution rules applicable for the 2016/2017 year and into the 2017/2018 year.
Note: You can find these articles, and more, by clicking on the links below.
Many thanks for your continuing support and interest in SuperGuide. We are entering our ninth year with 2 million-plus unique readers each year, and more than 26,000 newsletter subscribers. The December 2016 newsletter is our final edition for this year: in the second half of January 2017, expect a special holiday edition of the SuperGuide newsletter, covering wealth and retirement planning.
On behalf of the SuperGuide team, I wish you and your family a safe and festive holiday season.
GUIDES TO SUPER AND AGE PENSION CHANGES
A summary of the radical and substantial changes to the super laws, taking effect from 1 July 2017, is set out in this article. You can also access separate articles on each new measure. Read more
More than 330,000 Age Pensioners will have their Age Pension entitlements cut, with at least 100,000 of those affected Australians losing all Age Pension entitlements, taking immediate effect from 1 January 2017. The higher than predicted numbers is due to some miscalculations by the federal government: it looks like many thousands more will be affected by the January 2017 changes, than first anticipated due to the lower-than expected assets test thresholds. Read more
For those 100,000-plus Australians who lose all of their Age Pension entitlements due to the stricter Age Pension assets test, the government has changed the laws to ensure these Aussies automatically receive a Commonwealth Seniors Health Card, without having to satisfy the CSHC income test. Read more
The annual $100,000 non-concessional (after-tax) contributions cap became law on 29 November 2016, and takes effect from 1 July 2017. Read more
I receive a lot of questions from readers seeking information about how the non-concessional (after-tax) rules work; in particular, how the bring-forward rules works. The bring-forward rule works over a 3-year period so it is very important that you keep track of the size and timing of any non-concessional contributions. Read more
If you belong to a defined benefit super fund, then special rules apply to the measurement of super pensions in retirement phase, due to the unique nature of how defined benefit pensions are structured, and the difficulty (in most cases impossible) in commuting any defined benefit pension benefits that may exceed the cap. Read more
Here at SuperGuide we regularly receive emails from readers concerned their employer has not paid their superannuation entitlements into their super fund, or wondering what they can do because their employer has gone broke. Read more
The equivalent of 9.5% of your ordinary time earnings can mean different SG amounts depending on how, or if you negotiate a salary package, including whether you salary sacrifice. Read more
Read this article to discover what SuperGuide readers think about the Age Pension assets test changes, taking effect from 1 January 2017, and to find out what comment was awarded the inaugural SuperGuide Reader Comment of the Year. Read more
From 1 January 2017, the UPPER assets thresholds will be cut dramatically, which means more than 330,000 Australians will lose Age Pension entitlements. At the same time, the LOWER assets threshold will be raised which means an extra 50,000 Australians will receive the FULL Age Pension. Read more
New rules, introduced in December 2016, will impose a hefty super tax on super benefits when ‘working holiday makers’ leave the country, and apply for a Departing Australia Superannuation Payment. Read more
SUMMARY ARTICLES ON JULY 2017 CHANGES
With the removal of the tax exemption on the earnings of TRIPs from 1 July 2017, you can expect a TRIP will be less popular with older Australians. Read more
On 15 September 2016, Treasurer Scott Morrison and Minister for Revenue and Financial Services Kelly Dwyer issued a joint media release announcing that the proposed $500,000 lifetime cap on non-concessional contributions (which was to take retrospective effect from 3 May 2016) is now scrapped as a policy and will be replaced with an annual $100,000 cap, taking effect from 1 July 2017. Read more
Taking effect from 1 July 2017, the Coalition government has scrapped the $35,000 over-50s concessional (before-tax) cap and also cut the general concessional cap of $30,000. Read more
From 1 July 2018, if your superannuation account balance is less than $500,000 at the end of a financial year, then you will have the opportunity to utilise the unused portions of your concessional caps from previous years (up to 5 years’ worth) in the following financial year, or future years. Read more
From 1 July 2017, the 10% income test will be abolished, which means those employees with difficult employers, or individuals who are both employees and self-employed, or even those individuals who work part-time but generate more than 90% of their income from investments or other passive sources, will be able to make tax-deductible super contributions, subject to the annual concessional contributions cap. Read more
Taking effect from 1 July 2017 (although if you have more than $1.6 million in super you will need to take action well before 1 July 2017), the Coalition has introduced “a $1.6 million superannuation transfer balance cap on the total amount of superannuation that an individual can transfer into retirement phase accounts.” The cap applies to “both current retirees and to individuals yet to enter their retirement phase”. Read more
We have received many questions from readers about how the new $1.6 million transfer balance cap will operate when a fund member dies, especially if the fund member has arranged for his or her spouse to receive a superannuation death benefit pension, including a reversionary pension. This article provides a brief outline of how such pensions are treated for the $1.6 million transfer balance cap when the widow or widower, or other dependant, starts receiving such a super pension. Read more
In a welcome backflip, as part of its 2016 Federal Budget release on 3 May 2016, the Coalition government announced it would extend the Low Income Super Contribution (LISC) beyond its legislated expiry date of June 2017. This extension is now law, and from July 2017, the LISC has been renamed the Low Income Superannuation Tax Offset (LISTO). Read more
Until 30 June 2017, anyone earning an ‘income for surcharge purposes’ of more than $300,000 pays an extra 15% tax (total of 30%) on concessional (before-tax) super contributions. From 1 July 2017, the income threshold for paying the extra 15% tax on concessional contributions will be lowered to $250,000. Read more
From 1 July 2017, a super fund will not be able to pay a refund of a member’s lifetime superannuation contributions tax payments into a deceased estate, and likewise the super fund will not be able to claim a tax deduction for this payment. Read more
UPDATED 2016/2017 CONTRIBUTIONS GUIDES
This article explains all of the important rules that apply to concessional (before-tax) super contributions for the 2016/2017 year, and for previous years. Read more
The current $180,000 after-tax cap, and the 3-year $540,000 bring-forward cap will remain in place until 30 June 2017 (that is, it continues to apply for the 2016/2017 year). Read this article to find out more. Read more
The federal government is giving away money to anyone who makes a non-concessional (after-tax) contribution to their super fund, and who earns less than $51,021 a year (for the 2016/2017 year). The tax-free giveaway is officially called the co-contribution scheme. Read more