Dear Client, Hereunder we detail key tax changes contained in the 2016/17 budget. Please contact our office should you wish to discuss any of the matters contained in this memo. SUPERANNUATION REFORM CHANGES EFFECTIVE BUDGET NIGHT 3/5/16 New $500,000 lifetime non-Concessional Contributions Cap Will take in all non-concessional contributions made after 1/7/2007. Comment If a client has more than $500,000 of non-concessional contributions as at 3/5/16- they will not be required to withdraw the excess. However, no additional non-concessional contributions can be made to the Fund. Note: The above lifetime cap replaces the existing cap which allows $180,000 per year or $540,000 using the 3 year bring forward rule. EFFECTIVE 1ST JULY 2017 From 1/7/17 individuals who have a balance less than $500,000 may make additional CONCESSIONAL contributions where they have not reached their concessional cap in previous years. Only unused amounts from 1/7/17 can be carried forward- for a period of 5 consecutive years. 2. From 1/7/17 the government will remove the tax exemption on earnings of assets used to pay a transition to retirement pension (TRIS). Comment This change will apply irrespective of when the TRIS commenced. 3. From 1/7/17 the government will introduce a $1.6 Million “Superannuation Transfer Balance Cap”. Comment This means that the amount of accumulated Superannuation an individual can transfer into pension phase is limited to $1.6 Million per person. Earnings on the $1.6 Million will remain tax free. The $1.6 Million will be indexed to CPI. (Any excess above $1.6 million in your Super Fund will continue to be taxed at 15%) (Clients with a Pension Account balance greater than $1.6 Million each, will need to transfer the excess into accumulation prior to 30/6/17) From 1/7/17 the government will lower the annual cap on concessional superannuation contributions to $25,000 2. From 1/7/17 the “work test” for people 65-74 will be removed to permit taxpayers to contribute to their superannuation Fund. 3. From 1/7/17 superannuation concessional tax deductions will be available for individuals who maybe part Salary/ part self-employed Comment Under the current law a 10% test applies- whereby salary must be less than 10% of one’s assessable income in order for a concessional superannuation contribution to be made. From 1/7/17 clients earning in excess of $250,000 p.a. will be taxed at 30% on their concessional superannuation contribution. 2. From 1/7/17 low income spouse superannuation tax offsets income limit will be increased to $37,000- currently $10,800. The low income spouse tax offset provides a rebate of up to $540 per annum for the contributing spouse. OTHER TAX CHANGES 32.5% personal income tax threshold will rise from $80,000- $87,000 Company tax rate will fall over 10 years from 30% to 25% The small business entity turnover threshold will be increased to $10 Million for purposes of: Lower 27.5% corporate tax ( from 1/7/16) Simplified depreciation rules ( from 1/7/16) $20,000 asset write off ( from 1/7/16 to 30/6/17) Option to account for GST on a cash basis (from 1/7/16)
