Now that the government has announced that the retrospective $500,000 lifetime non-concessional contribution cap is not proceeding, some individuals will need to consider 2016-17 carefully. In particular, it is again going to be possible to drip feed UK monies to Australia for individuals over the age of 65. Also, because of the "use or lose" nature of the 2016-17 NCC cap, re-contribution strategies to equalize account balances with spouses should be considered.
The current rules for NCC contributions apply in 2016-17 i.e. $180,000 or $540,000 for the 3 year bring forward. For those between age 65 and 74 the work test must be met and the bring forward is not available. The work test is 40 hours of gainful employment within a 30-day continuous period, once a year.
The new proposals to apply from 1 July 2017 – subject to being passed by Parliament – are:
- Non-concessional contributions limited to $100,000 p.a.;
- Ability to bring forward two years to make a $300,000 non-concessional contribution;
- Ability to make any non-concessional contributions cease when the member’s superannuation balance reaches $1.6 million;
- Non-concessional contributions between 65-74 will need to meet the work test.
The other changes proposed – such as concessional contribution cap being reduced to $25,000 p.a. and planning the accumulation side of the retirement plan – have become more complex.
The NetActuary Team