2016 Federal Budget Update on Non-Concessional Superannuation Contributions
Superannuation reform changes (part 1)
Effective Budget Night – 7.30pm (AEST) 3 May 2016
New lifetime cap for non-concessional superannuation contributions
The government will introduce a $500,000 lifetime non-concessional contributions cap.
The lifetime cap will take into account all non-concessional contributions made on or after 1 July 2007 (i.e., from the 2008 income year) and will be indexed in $50,000 increments in line with average weekly ordinary times earnings.
If an individual has exceeded the cap prior to commencement date (being 7.30 pm (AEST) on 3 May 2016 (i.e., Budget night)), they will be taken to have used up their lifetime cap but will not be required to take the excess out of the superannuation system.
However, if after commencement, an individual makes non-concessional contributions that cause them to exceed the cap, they will be notified by the ATO and must withdraw the excess from their fund. Individuals who choose not to withdraw contributions will be subject to penalty tax.
It is important to be aware that the lifetime non-concessional contributions cap will replace the existing
non-concessional contributions cap, which allow non-concessional contributions of up to $180,000 per year (or $540,000 every three years for individuals aged under 65).
Note that, similar changes are proposed to apply to contributions into defined benefit accounts and constitutionally protected funds.
Part 2 Read Here
(Note: The information is provided by the National Tax and Accountants' Association - NTAA)
| Please Note:
Many of the comments in this publication are general in nature and anyone intending to apply the information to practical circumstances should seek professional advice to independently verify their interpretation and the information’s applicability to their particular circumstances. |