2017 Superannuation Contribution Information

Posted on 18th July 2016 by Christabelle Harris

Whilst we know there were a number of proposed changes to superannuation within the May Federal Budget, if the changes do eventually get legislated, all except one of the measures will not come into effect until 1 July 2017. Therefore there is no impact on the current 2017 financial year with the exception of the proposed non-concessional contribution limits which is discussed in more detail in this article.

The concessional caps have not been increased for the 2017 financial year and look to possibly decrease from 1 July 2017 with the May Budget proposals.  The concessional contribution cap remains at $30,000 for those aged under 49 years or $35,000 for those over 50 or turning 50 in current financial year.

Concessional contributions include:

• Employer contributions – including contributions made under a salary sacrifice arrangement
• Personal contributions claimed as a tax deduction by a self-employed person

If you should exceed your relevant cap, the excess is included as personal taxable income which is taxed at your marginal tax rate.  The ATO also apply an excess concessional contributions charge (ECC).  The current ECC charge rate is 5.01% and is calculated from the start of the income year in which the excess concessional contributions were made and ends the day before the tax is due to be paid for that year.

Under the current legislation, you can make concessional contributions into super up to age 65 without having to meet the work test.  It is proposed that this will increase to age 75 from 1 July 2017. For this financial year however, if you meet the work test, you can continue to make contributions into super up to age 75.  The work test means being gainfully employed for at least 40 hours in a period of not more than 30 consecutive days in the financial year.

Please be aware that if you have more than one super fund, contributions made to all of your funds are added together and count towards the concessional and /or the non-concessional caps as applicable.

Non-concessional contributions include personal contributions for which you do not claim an income tax deduction. The non-concessional contribution remains at $180,000 for the current financial year. However IF legislated, a lifetime cap of $500,000 (indexed) will apply to all non-concessional contributions with immediate effect from 7.30pm (AEST) 3 May 2016. The cap takes into consideration all non-concessional contributions made since 1 July 2007.

If you have exceeded your cap prior to commencement of the new rules, you will be taken to have used your lifetime cap but you will not be required to take the excess out.  However if legislated, where the excess occurs after 3 May 2016, you will be notified by the Australian Taxation Office to withdraw the excess from your super account or be subject to the penalty arrangements so this needs to be taken into consideration when looking to make non-concessional contributions into super.

If legislated, the lifetime non-concessional cap will replace the existing non-concessional contributions cap which allows you to contribute up to $180,000 per year or $540,000 under the bring-forward provisions for those age under 65 years.

Whilst we have historical contribution information for many of our self managed superannuation fund clients, we are also having to contact the Australian Taxation Office to confirm the non-concessional contributions reported by their various super funds since 1 July 2007. If you are looking to make a non-concessional contribution into super and you don’t have access to your historical non-concessional contribution amounts, please contact our office to discuss further.

There have been some increases to other superannuation thresholds for the 2017 financial year:

• The CGT contribution threshold has increased to $1,415,000 (up from $1,395,000).  This threshold is a lifetime threshold which applies to a contribution arising from capital gains which has been subject to the small business 15 year or retirement concessions.  This is a lifetime concessional cap which applies from 10 May 2006.
• The “low rate cap amount” has been increased to $195,000 (up from $185,000).  This cap is a lifetime cap and applies to the taxable portion of superannuation lump sums which have been paid in relation to retirement or permanent incapacity prior to the member reaching age 60.  If a superannuation lump sum is within the cap, the rate of tax will be reduced to zero.  The cap does not apply to superannuation lump sums received after age 60 as these are generally tax free.
• The other threshold which has increased slightly is the entitlement to a Government co-contribution.  This threshold has increased to $36,021 (previously $35,454).  If your adjusted taxable income is less than the threshold, the Government will make a $1 super contribution for each $2 of after tax super contributions made.  The maximum co-contribution payment is $500.  If your adjusted taxable income exceeds $36,021, the maximum co-contribution reduces in proportion as your adjusted taxable income exceeds that threshold.   For the 2017 financial year, if your adjusted taxable income exceeds $51,021 then no co-contribution will be paid.