Changes to unpopular Federal Budget

By Julian Nowland

Treasurer Scott Morrison has buckled to intense backbench pressure and dumped many unpopular elements of its superannuation policy that were announced in May’s Federal Budget. Some of the key measures are:

• The proposed $500,000 limit on after-tax contributions, will be replaced by an annual non-concessional $100,000 limit, down from the current $180,000, and will quash debate that the $500,000 lifetime cap was retrospective.

• This above cap will commence from 1 July 2017 meaning that clients have up until 30 June 2017 to take advantage of the higher $540,000 bring forward rule (as opposed $300,000 post July 2017)

• To offset the expected $400 million over four years the above changes will cost, the Federal Government will now not proceed with removing restrictions on 65 to 74-year-olds wanting to make voluntary contributions on super (the so called work test).

• Once individuals reach $1.6m in superannuation, they will no longer be eligible to make non-concessional contributions.

• There are no changes to the proposals around concessional contributions (including lowering the limit to $25,000) other than delaying the “catch-up” opportunity for those with less than $500,000 in super by 12 months to a 1 July 2018 commencement.