Key Points from the 2016 Budget

From 1 July 2017

The maximum contributions for salary sacrifice and superannuation guarantee contribution will be $25,000

Change – currently it is $35,000 for people aged 50 and over and $30,000 for people aged below 50.

The maximum amount that can be contributed as an after-tax contribution (eg. excess proceeds from the sale of the home or an inheritance that is contributed to superannuation) is $500,000 over a lifetime. Amounts contributed since 1 July 2007 are included in this.

Change – currently there is a limit of $180,000 per year; no lifetime cap applies.

People earning over $250,000 will pay 30% tax on contributions to superannuation (salary sacrifice and superannuation guarantee).

Change – currently the superannuation contributions for income earners under $300,000 are taxed at 15%, for people earning over $300,000 it was already at 30%. 

The maximum amount that can be transferred to a ‘superannuation pension’ is $1.6m per person. The earnings of this amount in superannuation is tax-free. The income of the remaining amount is taxed at 15%.

Change – currently there is no maximum amount that can be transferred and all income in superannuation pensions are tax-free.

People aged 65-75 will no longer have to work to contribute to superannuation.

Change – Currently a work test applies that stipulates that someone has to work for 40 hours in 30 days to qualify to contribute to superannuation.

People in ‘transition to retirement’ pensions (accessing a pension from superannuation while still working) will pay tax of 15% on the income generated in their account.

Change – Currently all income in a ‘transition to retirement’ account are tax-free.

People earning less than $37,000 will have the tax they pay on concessional contributions (salary sacrifice and superannuation guarantee) refunded up to a cap of $500.

Change – currently the contributions are taxed at 15% and no refund provided.

The maximum income for a spouse to receive a spouse offset has increased to $37,000. This is a tax ‘refund’ a person received when they contribute to their spouse’s superannuation account. The offset is 18% up to a maximum of $540.

Change – currently the maximum income allowed for the spouse is $10,800.

Employees are now able to make contributions (up to the $25,000 cap) and claim a tax deduction

Change – currently only self-employed people were able to make these contributions, employees had to salary sacrifice.

Unused concessional contributions can be carried forward over 5 years, this means if someone does not contribute the maximum amount of $25,000, they can ‘catch up’ in later years. This is available for people with balances below $500,000.

Change – currently the maximum cap cannot be exceeded in each year.

For more detailed information, please review – Federal Budget 2016-17.


Disclaimer: This article has been prepared by Count Financial Limited ABN 19 001 974 625, AFSL 227232, (Count) a wholly-owned, non-guaranteed subsidiary of Commonwealth Bank of Australia ABN 48 123 123 124.

Information in this article is based on current regulatory requirements and laws, which may be subject to change. While care has been taken in the preparation of this document, no liability is accepted by Count, its related entities, agents and employees for any loss arising from reliance on this document.

This document contains general advice. It does not take account of your individual objectives, financial situation or needs. You should consider talking to a financial adviser before making a financial decision.