Back in May I updated you on the proposed changes to Superannuation. Today the Federal Government has made some significant amendments to its Super Package.
I was delighted to hear that they have scrapped their plans of the $500,000 limit (which they wanted to backdate to 2007) that you could contribute to your Super Fund with after tax money. It has been replaced with a yearly cap of $100,000 going forward from 1st July 2017 (previously $180,000) that you are able to contribute into your Superannuation with after tax money.
You can keep contributing into your Super until you reach $1.6 million then you are no longer able to make after tax contributions. They have also kept the ‘bring forward rule’ meaning that you are able to make after tax contributions of $300,000 every 3 years.
You will also still be able to make $25,000 before tax contributions into your Super Fund each year. Before tax contributions are things like ‘Super Guarantee’ and ‘Salary Sacrifice’.
The catch up rules which allow you to make additional before tax contributions when you haven’t put up to the $25,000 in previous years will come into effect on the 1st July 2018 instead of 2017. This has been proposed to make up for the lost savings in the budget as a result of the amendments.
In addition those that will be affected under the changes are people aged between 65 and 74. Currently if you fall into this age group you have to meet the work test to be able to make Super Contributions. Part of the proposal back in May was to remove the work test enabling people to contribute to their Super regardless of whether they worked or not. They have now stated that the work test rule will remain.
All in all most of the package remains the same and the amendments will give people the best opportunity for saving for their own retirement.