Legislative Changes for Personal Super Contributions

There have been a number of important legislative changes regarding personal super contributions that have come into effect from July 1st, 2017. As an advisor or administrator, keeping up to date with these changes allows you to provide the best services possible to your clients and ensure they are getting the most from their self-managed funds.

Max Contribute Dropped for Members From 35,000 to 25,000

From July 1st, 2017 the Coalition government changed the concessional contributions cap for over 50’s, dropping it from $35,000 down to $25,000. It also decided to reduce the general concessional contributions cap for under 50’s, reducing it from $30,000 to $25,000. To simplify, a single annual cap of $25,000 now applies to everyone, regardless of age.

An Employer Can Contribute More

A concessional contribution (or ‘a before-tax super contribution’) can also include an employer’s Superannuation Guarantee contribution. This is a salary sacrificed, extra super contribution that is arranged with an employer. For those that are either self-employed or unemployed, a tax deductible super contribution is also allowed.

It’s important to note that although the government has done away with the over 50’s concessional cap and droppedthe general concessional cap, it has allowed a concession where failure to use the annual concessional contributions cap of $25,000, allows you to then carry forward the unused portion for up to 5 years. This is provided the total super balance is less than $500,000.

Member Contributions for SMSF Dropped from 180,000 to 100,000

Additionally, from July 1st, 2017, the annual concessional contributions cap has been lowered from $180,000 to $100,000. This change also flows through to a lower a lower 3-year bring-forward cap of $300,000 as opposed to the pervious bring forward cap of $540,000.

The good news for your clients is that many of these legislative changes can benefit trustees when utilised properly.

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