Still working and saving? What super changes mean for you

Super laws change on 1 July – do you know how it will affect your savings?

Still working and saving? What super changes mean for you

If you’re still working and saving for retirement, there are certain superannuation changes taking effect from 1 July 2017 that could have more of an impact than others. 

Here we look at some of the changes and what they may mean for your retirement savings. 

Reduction of concessional caps
Currently, two concessional caps apply – those under 50 can contribute $30,000 per annum, and for those over 50, a limit of $35,000 applies. Included under concessional caps are the superannuation guarantee contributions made by an employer and salary-sacrifice contributions requested by an employee. From 1 July 2017, one cap of $25,000 will apply regardless of the fund member’s age. 

Increased contribution tax for high income earners
High-income earners who earn more than $250,000 per annum (including superannuation contributions) will pay a rate of 30 per cent tax on all concessional contributions. Funds that previously had an exemption on the higher rate of tax will also be subject to this change.

Replacement of the Low Income Super Contribution (LISO)
The LISC will cease on 1 July 2017, and in its place will be the Low Income Superannuation Tax Offset (LISTO). Under the LISTO, low-income earners with an adjustable taxable income of $37,000 or less will receive a refund of up to $500 into their superannuation fund to cover tax paid on contributions. 

Increased access to tax-deductible contributions
The 10 per cent income test that applies to tax-deductible contributions will be removed from 1 July 2017. This means that all individuals under the age of 75 who make personal superannuation contributions can claim the tax deduction. This will be of particular benefit to those who are self employed, or who work for employers that don't have salary-sacrificing arrangements. 

Increase to the income threshold for spouse contributions tax offset
If you currently make, or are planning to make a superannuation contribution on behalf of your low-income earning spouse, the threshold under which this is allowable will increase from $13,800 to $40,000. The tax offset is currently worth up to $540.

Catch-up concessional contributions
Also important to note for the future is the introduction, from 1 July 2018, of the ability to make catch-up concessional contributions. Those who have superannuation balances of less than $500,000 will be able to carry forward unused portions of concessional caps, on a rolling basis, for a period of five years.

Retirement GuideTo learn more about the changes to super, and how you can plan for what’s ahead, read the latest YourLifeChoices eGuide How will July super changes affect you? sponsored by AustralianSuper. 

This article has been sponsored by AustralianSuper Pty Ltd ABN 94 006 457 987, AFSL 233788, the Trustee of AustralianSuper ABN 65 714 394 898. The views expressed are those of YourLifeChoices and not necessarily the views of AustralianSuper. The article contains general information and you should consider your personal financial situation before making a decision.


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