Sweeping super changes: planning is essential.

$540,000 non-concessional contribution cap removed.

The current annual non-concessional contribution cap of $180,000 and 3-year bring-forward limit of $540,000 will be in place up to 30 June 2017 only.

From 1 July 2017, an annual non-concessional cap of $100,000 and 3-year bring-forward limit of $300,000 will only be available if your super balance is below $1.6 million.

Consider making a non-concessional contribution before 30 June. This can be in cash or listed shares.

The 1.6-million-dollar question.

From 1 July 2017, individuals with a total superannuation balance of more than $1.6 million will be affected in the following ways.

• You will no longer be eligible to make non-concessional contributions to your super.

• A cap will be placed on how much money you can transfer to a pension account, where earnings are tax free. Please note: funds are not required to pay members the excess over the $1.6 million.

• If you receive a defined benefit pension, you will need to multiply the amount by a factor of 16 and then assess this against the $1.6-million tax-free pension limit.

• If the recipient of the defined benefit pension exceeds the $1.6 million limit, the excess must be commuted from the pension account and either withdrawn or transferred to an accumulation account, where the investment earnings will be taxed at 15%.

Lowering of the concessional contribution cap.

After 30 June, the $30,000 concessional contribution cap for people under 50 will end, as will the $35,000 concessional contribution cap for those aged over 50.

From 1 July, the concessional contribution cap will be lowered to $25,000 for all taxpayers.

Removal of 90/10 rule.

This is a positive change that will reduce admin and errors. At present, only doctors who earn less than 10% of their income from a salaried source can claim a tax deduction for their personal super contributions. From 1 July, irrespective of your source of income (e.g. from the hospital via VMO and/or salaried position), you can make personal deductible contributions. This means you will no longer need to salary sacrifice super contributions – a process which can be difficult to organise and administer.

Income threshold reduced from $300,000 to $250,000. Tax increased by 15%

From 1 July, anyone with an adjusted taxable income of $250,000 will have their concessional superannuation contributions taxed at 30% rather than 15%.

Transition to Retirement Income Streams (TRIS).

From 1 July, assets supporting Transition to Retirement Income Streams will no longer be tax-exempt.

Cost-base reset for pre-1 July 2017 pension assets.

Super funds need to make a choice via an election to apply for Capital Gains Tax(CGT) Relief. This will allow them to reset the cost base on CGT assets that are moved or reapportioned from the retirement phase to the accumulation phase. In this way, when assets are sold, the cost base is reset to the market value as at 30 June 2017. This measure may result in substantial tax savings.

If you own real estate or defined benefits through super, or you’re over 50, it is critically important that you act before 30 June 2017 or, ideally, before 31 May.

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