2018 has already been a turbulent year for the global economy, with recent volatility in the stock market sparking some concerns for the future. So what major factors are currently influencing the Australian and international economies – and how will these shape the year ahead? Here are some of the economic trends everyone’s talking about.
On Wednesday 23 November 2016, the Federal Government’s proposed changes to super rules were passed by Parliament. This means that from 1 July 2017, the amount you can put into super each year will be reduced – which could impact your retirement plans. So before the changes happen, it’s a good idea to consider whether you should contribute a bit extra to your super.
Non-concessional contributions cap: 500K lifetime cap replaced by new annual cap
The Government has announced that the 2016-17 Federal Budget proposal to introduce a lifetime non-concessional cap of $500,000 will not go ahead. In its place, the Government has proposed the introduction of an annual non-concessional contributions cap of $100,000 per year.
New annual non-concessional cap
From 1 July 2017, the Government has proposed lowering the annual non‑concessional contributions cap from $180,000 to $100,000. In addition, individuals with a balance of more than $1.6 million will no longer be eligible to make non‑concessional contributions.
The bring forward rule where individuals under age 65 are eligible to bring forward 3 years of non‑concessional contributions will still be available.
The $1.6 million threshold will be based on an individual’s balance as at 30 June of the previous year. Individuals with balances close to $1.6 million will only be able to bring forward the annual cap amount for the number of years that would take their balance to $1.6 million.
Transitional arrangements will apply. Where the non-concessional bring forward has been triggered but not fully used before 1 July 2017, the remaining bring forward amount will be reassessed on 1 July 2017 to reflect the new annual caps. It may, therefore, be beneficial to take advantage of the $540,000 non-concessional cap this financial year as it will be reduced from next financial year.
Other proposed changes
In the Government’s media release, it was also announced that they will not proceed with the proposal to remove the work test requirement for contributions for those aged 65 to 74. Individuals between 65 and 74 will be eligible to make annual non-concessional contributions of $100,000 if they meet the work test, but will not be able to access the bring-forward provision.
In addition, the commencement date of the proposed catch-up concessional superannuation contributions will be deferred by 12 months to 1 July 2018.
Contact us to find out how this may affect you.
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.