On 15 September, Treasurer Scott Morrison announced the new super rules. These rules have replaced the new (now old) rules previously announced in the May Budget. To make it even more confusion, these are still only proposals and still need to go through both houses of Parliament to become law.
Regardless, unlike the May budget announcements, these announcements are much more acceptable. Credit must be given to Mr Morrison for realising that his original plans were terrible and quickly changing.
So what are the new new changes.
Instead of going forward with its proposed $500,000 lifetime cap on after-tax contributions, the Government has decided to go back to the current rules for after-tax contributions but with a lower annual limit of $100,000.
This will now allow people to:
make non-concessional contributions of up to $100,000 per year
have the ability to bring forward 3 years’ worth of contributions to a single year (allowing you to contribute up to $300,000 in a single year)
The ability to make non-concessional contributions will also be limited to people who have an individual superannuation balance of under $1.6 million. In addition, if you are aged 65 or over you need to pass the “work test” to contribute to your super and cannot bring forward contributions to the current year.
As previously announced, the concessional contribution limit (tax deductible contributions) will be reduced to $25k per year.
The new rules will apply from 1 July 2017. This means that for the current 2016-17 financial year people can still make non-concessional contributions of up to $180,000.