On 23 November 2016, some of the most far-reaching superannuation reforms of the past decade were passed by both Houses of Parliament.
The superannuation reform package was announced in the 2016-17 Budget and amended following consultation.
The changes aim to improve the fairness, sustainability, flexibility and integrity of the superannuation system.
The superannuation 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, which is expected to boost the retirement incomes of around 3.1 million low income earners.
The changes that will have the most significant negative impact will affect the more affluent members of our community. In saying that, there are going to be very few Australians who will be adversely affected by even the worst of the changes. For those who are adversely affected, some careful planning and good financial advice should be sufficient to mitigate the worst of the undesirable outcomes.
Most of these measures will take effect from 1 July 2017. Better targeted tax concessions will make the superannuation system more sustainable as the population ages and fiscal pressures increase. Savings also enable reforms that allow the system to work better for all Australians and increase its flexibility to align with the changing work–life patterns of modern Australia.
2016–17 Budget and related superannuation reforms include:
Legislating the objective of superannuation.
Introducing a $1.6 million superannuation transfer balance cap.
Reforming the taxation of concessional superannuation contributions.
Lowering the annual non–concessional contributions cap.
Introducing the Low Income Superannuation Tax Offset (LISTO).
Improving access to concessional contributions.
Allowing catch–up concessional contributions.
Extending the spouse tax offset.
Removing barriers to innovation in retirement income stream products.
Improving the integrity of transition to retirement income
Abolishing the anti–detriment rule.
Streamlining administrative processes.
Further details on the Government’s superannuation reform
package are available on the treasury website at www.treasury.gov.au/superreforms.