2016/17 Federal Budget - changes to super

1 July 2017

Disclaimer: this information is intended to give an overview of the Federal Government's changes to super. The information is of a general nature and does not take into account a member's specific circumstances. The information explains how the changes may impact members and you may wish to review your existing arrangements in light of the changes. However, before making any decisions, we recommend that you carefully consider your own position and requirements including where appropriate seeking professional advice. The information is correct as at 1 July 2017.

The Federal Government made a number of changes to the rules relating to super. These changes were initially announced in the 2016/17 Federal Budget and then amended following public consultation. The legislation giving effect to the changes passed through Parliament and is now law.

Most of the changes took effect from 1 July 2017. The changes apply to members of each of the Gold State Super, West State Super, GESB Super, Retirement Income Pension and WA State Pension Schemes.

An overview of the changes is set out below. After each summary you will find links to fact sheets and articles which provide further background information. For a complete discussion of the Federal Budget super changes, visit the Department of Treasury Superannuation Reforms website.

The 2016/17 budget super changes included:

Eligibility for tax deductions for personal super contributions

Which accounts are affected?

West State Super and GESB Super members

When?

From 1 July 2017

What has changed?

  • West State Super members are no longer be eligible to claim a tax deduction for personal super contributions made after 30 June 2017 to West State Super.
  • GESB Super members under the age of 65, and those aged 65 to 74 who meet the work test (i.e. you work 40 hours within a 30-day period each income year), are able to claim a tax deduction for personal super contributions made to GESB Super up to the concessional contributions cap. The existing restriction of tax deductions for personal contributions to those who earn less than 10% of their income from salary or wages will be removed.

More information

Lowering the annual concessional contributions cap

Which accounts are affected?

GESB Super, West State Super, Gold State Super and WA State Pension Scheme members

When?

From 1 July 2017

What has changed?

  • For GESB Super, the annual concessional (before-tax) contributions cap has been lowered to $25,000 (it was $30,000 for those aged under 49 at the end of the previous financial year and $35,000 otherwise).
  • Concessional contributions to West State Super and Gold State Super are not limited by the annual concessional contributions cap and this remains unchanged. However, concessional contributions made to West State Super or Gold State Super are now included in the annual contributions cap (for the purposes of determining the remaining annual cap available for any taxed super funds you may have).
  • Likewise, notional employer contributions to the WA State Pension Scheme now count towards the $25,000 cap for concessional contributions to taxed schemes.

More information

Allowing 'catch-up' concessional contributions

Who will be affected?

GESB Super members

When?

From 1 July 2018

What will change?

  • From 1 July 2018, members who have not used their full concessional (before-tax) contributions cap, with super account balances of less than $500,000 may be able to make 'catch-up' concessional contributions.

More information

Lowering the annual non-concessional contributions cap

Which accounts are affected?

GESB Super, West State Super and Gold State Super members

When?

From 1 July 2017

What has changed?

  • The annual non-concessional (after-tax) contributions cap has been lowered to $100,000.
  • Members with a super account balance of $1.6 million or more are no longer be eligible to make non-concessional contributions.
  • Members under age 65 are still be eligible to bring forward up to three years of non-concessional contributions. However, any amounts brought forward from 1 July 2017 will now reflect the reduced annual cap.
  • Members with account balances close to $1.6 million can only bring forward the annual cap amount for the number of years that would take their balance to $1.6 million.
  • Transitional arrangements apply for members who made a non-concessional contribution in 2015/16 or 2016/17, but didn't fully use their bring forward before 1 July 2017. For example, for amounts brought forward from 2015/16, the transitional cap will be $460,000 (the annual cap of $180,000 from 2015/16 and 2016/17, and the $100,000 cap in 2017/18), and for amounts brought forward from 2016/17, the transitional cap will be $380,000 (the annual cap of $180,000 in 2016/17, and $100,000 in 2017/18 and 2018/19).

More information

Introducing a $1.6 million cap on tax-free retirement account balances

Which accounts are affected?

GESB Super, West State Super, Gold State Super, Retirement Income Pension and WA State Pension Scheme members

When?

From 1 July 2017

What has changed?

  • A $1.6 million transfer balance cap applies on the total amount of accumulated super that can be transferred to or held in a tax-free retirement account.
  • Retirement savings over $1.6 million can remain in a super accumulation account where the earnings will be concessionally taxed at 15%, or be invested outside of super.
  • Transitional arrangements apply for members already retired with balances over $1.6 million but at or below $1.7 million on 30 June 2017. You have six months from 1 July 2017 (until 31 December) to bring your retirement account balances below $1.6 million without penalty.
  • The transfer balance cap doesn’t apply to transfers to Transition to Retirement Pension accounts.
  • For members of RI Term Allocated Pension, the value of your RI Term Allocated Pension account is calculated by multiplying your annual pension amount by the number of years (rounded up to the next whole number) remaining on your term.
  • For members of the WA State Pension Scheme, upon payment of your pension, the 10% tax offset will only apply for up to $100,000 gross pension per year.
  • For members of the WA State Pension Scheme, a factor of 16 is applied to the gross value of your pension to work out whether you are eligible to add more lump sum amounts to a retirement account. For example, if your gross pension is $80,000 per annum and you have used $1,280,000 (16 x $80,000) worth of the available $1.6 million, then you can add another $320,000 to a tax-free retirement account.

More information

Lowering the income threshold for Division 293 tax for high income earners

Which accounts are affected?

GESB Super, West State Super and Gold State Super members

When?

From 1 July 2017

What has changed?

  • The threshold at which high-income earners pay additional tax on their concessional contributions (Division 293) has been lowered from $300,000 to $250,000 per annum.

More information

Removing the anti-detriment rule for the payment of death benefits

Which accounts are affected?

GESB Super and Retirement Income Pension members

What has changed?

  • The anti-detriment provision for the payment of death benefits has been removed (the provision still applies where death occurred before 1 July 2017 and the death payment is made before 1 July 2019)

Extending the spouse tax offset

Which accounts are affected?

GESB Super and West State Super members

When?

From 1 July 2017

What will change?

  • For contributions made in the 2017/18 financial year (and later years) eligibility for the tax offset for spouse contributions has been extended to recipient spouses earning up to $40,000 (as long as your spouse has not exceeded their non-concessional contributions cap or their balance is not $1.6 million or more).
  • The tax offset of up to $540 was previously available to people who make super contributions to their spouses with incomes up to $10,800.

More information

Renaming the low income super contribution (LISC)

Which accounts are affected?

GESB Super and West State Super members

When?

From 1 July 2017

What has changed?

  • The low-income superannuation contribution (LISC) is now known as the 'low-income superannuation tax offset (LISTO)'.
  • West State Super members continue to be ineligible to receive the LISC or LISTO.

More information

Taxing earnings from Transition to Retirement pensions

Who will be affected?

Retirement Income members

When?

From 1 July 2017

What will change?

  • Investment earnings on Transition to Retirement accounts are no longer tax exempt. From 1 July, these earnings are taxed at a concessional rate of up to 15%, regardless of when the Transition to Retirement started.
  • Members are no longer allowed to treat certain super income stream payments as a lump sum for tax purposes. However,  this change doesn’t apply to your Transition to Retirement account with us.

More information

Page last updated 04 July 2017