The government’s extensive changes to the taxation laws regarding superannuation were passed by Parliament on 23 November 2016.
According to the Treasurer, Mr Scott Morrison:
“The superannuation reform package better targets tax concessions to make our superannuation system fair and sustainable, as the population ages and fiscal pressures increase.
“The reforms include the introduction of a $1.6 million transfer balance cap, which places a limit on the amount an individual can transfer into the tax-free earnings retirement phase and the introduction of the Low Income Superannuation Tax Offset”.
The amendments also include the following two new measures to provide more flexibility to help Australians save for their retirement:
- the removal of the ‘10% rule’, allowing anyone (including employees) to claim a deduction for personal contributions into superannuation from 1 July 2017 (which will particularly help contractors who also draw income from salary and wages); and
- the ability for individuals with superannuation balances below $500,000 to make ‘catch up’ concessional contributions from 1 July 2018 (allowing them to ‘tap into’ unused amounts of their contributions cap from prior years, which will help those with broken work patterns – the overwhelming number of whom are women – better save for their retirement).