skip to content
RaboDirect
 

Here's what you need to know about super changes

Legislative changes to implement the Government's superannuation reforms are taking effect from 1 July 2017.  
Read on and watch our video below to find out how you can make the most of your super before the changes come into effect.

New super rules explained

From 1 July 2017, the amount you can contribute to your superannuation will be decreasing, and many Australians will be affected. The maximum contributions will be reduced and the maximum balance of tax-free pension funds that you can save for retirement will be capped at $1.6M. 

Additionally, Australians who are transitioning to retirement using a Transition to Retirement (TTR) pension  will be paying more tax, while those receiving a pension will need to put more thought into where their living expenses come from and how they manage their estate planning with superannuation.

Changes to your super contributions

You can contribute more into super in the current financial year compared to what will be possible after 1 July 2017. The new rules will reduce after-tax or non-concessional contribution from $180,000 to $100,000; while your maximum pre-tax or concessional contributions will be reduced to $25,000.

Watch Peter Hogan, Head of Technical at Self Managed Super Fund Association as he explains what these changes can mean to you.

RaboDirect offers competitive savings products for SMSFs.
Find a savings account that's right for you.

Frequently Asked Questions

About contributions

How much can I deposit as a non-concessional contribution before the changes come into effect 1 July?

Share

Under the current rules you are able to make an $180,000 non-concessional contribution each year. Depending on what other non-concessional contributions you have made since 1 July 2014, you may be able to use the ‘bring forward’ rule to deposit a total of $540,000 before 1st July 2017 if you are under 65.

A non-concessional contribution is a deposit you make to your super fund with funds that you have already paid tax on. This could be funds received from a sale of a property, shares, funds from your personal savings, an inheritance, or lottery winnings.

What are the changes to concessional contributions?

Share
Currently, the annual contribution cap is $35,000 for people aged over 49 on the 30th June 2016 and $30,000 for those aged under 49 on the 30th June 2016. If over 65 you must meet the work test to contribute. This will be reduced to $25,000 from 1st July 2017 up to age 65, when the work test applies.

What other changes are there to the contribution rules?

Share

From 1 July 2018 if you have less than $500,000 in total super then you can carry forward your unused concessional contributions for up to five years. 

What’s the difference between a concessional and non-concessional contribution?

Share

Concessional contributions are also known as before tax contributions and are generally contributed by your employer or through salary sacrifice. Non-concessional contributions are after tax contributions for which an individual hasn’t claimed a tax deduction.

Are there changes to the Super Contributions Surcharge (Division 293 tax) for high income earners?

Share

Yes. The income threshold has been lowered from $300,000 p.a. to $250,000 p.a. For more information on ‘Division 293 Tax’, visit the ATO.

About pensions

What are the changes to the Transition to Retirement Pension (TTR)?

Share

The government will remove the tax exemption on fund earnings that support a TTR from 1 July 2017. Essentially a TTR will now be taxed at the same rate as funds in the accumulation phase.   

Is there a cap on how much money I can have in Super after 1 July 2017?

Share

No, however the amount you can contribute will be limited if you have more than $1.6M in super. Additionally, there is now a cap of $1.6M that can be transferred into retirement phase.

I’ve already retired and my super is already in pension phase. What happens on 1 July 2017?

Share

If you’re in pension phase now, whatever is in your pension on 1 July 2017 is the relevant value. So for example, if you have $2M, you will need to move back the $400,000 into an accumulation account (where earnings will be taxed at 15%) or withdraw the excess from superannuation all together.

Will the pension phase cap of $1.6M increase over time?

Share

Yes, it will be indexed for inflation in $100,000 increments.

What is the new maximum balance that I can accumulate in my superannuation pension account that receives tax free status?

Share

The new maximum balance that receives tax free status will be $1.6M plus any earnings growth after the pension starts. Previously there was no maximum balance.

Changes to Super: Accumulation phase

How to maximise your super in the Accumulation phase

Have you considered a super splitting strategy? Use our checklist for helpful tips on making the most of your super contributions.

Learn More
Changes to Super: TTR phase

The best super strategies for Transition to Retirement accounts 

Did you know Transition to Retirement pensions do not count towards the $1.6M pension transfer limit? Here are some useful super strategies as you near retirement.

Learn More
Changes to Super: Pension phase

Tips and traps for super in the Pension phase

What should you do if your super balance is over $1.6M? Read up on how the new super rules affect you.

Learn More

Disclaimer: The views expressed, and any advice given, in the above articles and videos are those of the authors, and do not necessarily reflect the views of RaboDirect. 
We recommend that you seek professional advice before making any decisions relating to the matters discussed on this page and their related articles.