Superannuation Changes - concessional contributions
The Super Reforms have now passed as legislation. Over the next few weeks we shall provide information on these changes so that you can start thinking about any changes that may be required between now and the 30 June 2017 deadline.
This week we shall outline the changes with regards to concessional contributions.
What are concessional contributions?
Concessional contributions are contributions to superannuation that are taxed at 15%. The most common types of concessional contributions are employer contributions such as super guarantee (currently 9.5% of wages), and salary sacrifice contributions. In addition, concessional contributions also include personal contributions which the member claims as an income tax deduction.
What are the changes?
From 1 July 2017, the Government will reduce the annual cap on concessional contributions to $25,000 regardless of age. Depending on the age of the member this is a reduction of either $5,000 or $10,000.
What are the limits for year ended 30 June 2016?
For those aged 50 and over the maximum allowable contributions are $35,000.
For those below 50 the maximum allowable contributions are $30,000.
What should you consider?
For those wishing to accumulate more in superannuation, you may want to consider if it is possible to maximise the concessional contributions this financial year before the contributions caps are lowered beginning 1 July 2017.