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Federal Budget 2016/17: proposals now law

Published August 2017

Since the 2016/17 Federal Budget was delivered in May 2016, the Government has made some changes to the original proposals announced for superannuation. Read this article to understand the proposals which are now law.

Reduced concessional contributions cap

From 1 July 2017, the annual concessional contributions cap has reduced to $25,000 regardless of your age (previously it was $35,000 if you were aged 50 or more at 30 June 2017 and $30,000 if you were aged less than 50 at 30 June 2017). The cap will be indexed and increase in increments of $2,500 in line with average weekly ordinary time earnings (AWOTE).

Reduced non-concessional contributions cap

From 1 July 2017, the annual non-concessional contributions cap has significantly reduced to 100,000 from $180,000.

If you are under age 65 at the start of a financial year, you should note that the two years bring-forward amount that can be contributed over any three year period will also significantly reduce from $540,000 (2016/17) to $300,000 (2017/18). From 1 July 2017, the ability to use this bring-forward rule is also impacted if your total super balance is at least $1.4 million but less than $1.6 million.

What does this mean?

If you have brought forward your non-concessional contributions within the previous two financial years, you can only contribute any residual amount without breaching your non-concessional contributions cap.

Non-concessional contributions – super balances of $1.4 million or more

From 1 July 2017, if your total super balance is $1.6 million or more at 30 June of the previous financial year, then you cannot make non-concessional contributions in that financial year. The two years bring-forward rule (refer to the section above) is also impacted where your total super balance is at least $1.4 but less than $1.6 million. Refer to the following table for details.

Total superannuation balance on 30 June 2017

Maximum non-concessional contributions cap for the first year

Bring-forward period

Less than $1.4 million


3 years

$1.4 million to less than $1.5 million


2 years

$1.5 million to less than $1.6 million


No bring-forward period, the standard non-concessional contributions cap applies

$1.6 million



What does this mean?

From 1 July 2017, if you have a higher super balance you may also wish to consider accumulating wealth for your retirement in a non-super environment. To manage your total super balance and the transfer balance cap (refer to the transfer balance cap for details), couples may also consider making spouse contributions (refer to the tax offset details) and contribution splits on behalf of their spouse with the lower super balance.

Personal contributions claimed as a tax deduction by more than self-employed

From 1 July 2017, more individuals will be able to claim a tax deduction for their personal contributions which can be a great tax incentive if they are considering topping up their super. If you have a salary sacrifice arrangement in place you may wish to review this as it may no longer be your most effective strategy for contributing to your super.

New Low Income Super Tax Offset (LISTO) contribution

Eligible individuals with an annual adjusted taxable income of $37,000 p.a. or less will receive a boost to their super with a LISTO contribution from the Government. If you are eligible, the LISTO contribution will be equal to 15% of your total concessional contributions for an income year, capped at $500. The LISTO replaced the current low income super contribution (LISC) that ceased on 30 June 2017.

Spouse contribution tax offset to become more available to couples

The low income spouse contribution tax offset will be made available to more couples making a contribution on behalf of their low income or non-working spouse (aged less than 70), including a de facto partner. A maximum tax offset of up to $540 p.a. will be available where your spouse has an income of $37,000 p.a. or less (previously this was $10,800 p.a. or less). To receive the maximum tax offset requires you to make a contribution of at least $3,000 on behalf of your spouse. The offset will gradually reduce if your spouse’s income is above $37,000 p.a. and cuts out at an income of at least $40,000 p.a. (previously this cut out at an income of least $13,800 p.a.).

Reduced Division 293 tax threshold for high income earners

If your adjusted annual taxable income (including total concessional contributions less any excess concessional contributions) is greater than $250,000 p.a., then your concessional contributions above this threshold will be subject to an additional 15% tax (Division 293 tax). The threshold reduced from $300,000 p.a. This additional tax means that you will pay a maximum of 30% tax on your concessional contributions above the threshold. This Budget measure also applies to members of defined benefit funds but different rules apply to the calculation of this tax for defined benefit members.

New $1.6 million transfer balance cap – retirement income phase

If you are retired or about to retire, from 1 July 2017, the total amount of super benefits that you will be able to transfer into the retirement phase will be capped at $1.6 million. Investment earnings are currently tax free in the retirement phase.

If you are already retired and are currently receiving a retirement income stream(s), then your existing retirement income stream(s) will be assessed against the cap based on your total balances as at 30 June 2017.

If you exceed the cap, you will be required to rectify the breach by removing the excess amount (and certain notional earnings on this amount) from your retirement income stream. You will also be liable to pay a penalty tax on your total notional earnings (based on the general interest charge) attributable to the excess amount until the breach is rectified.

Certain non-commutable lifetime pensions, lifetime annuities, term pensions and term annuities have special values counted towards the transfer balance cap. Tax implications may apply to income stream payments that exceed $100,000 for these types of income streams. Generally, non-commutable income streams do not allow lump sum withdrawals or the benefits to be rolled back to accumulation.

You should also note that transition to retirement (TTR) income streams do not count towards the transfer balance cap.

What does this mean?

To rectify the breach, the excess amount (and certain notional earnings on this amount) can be transferred back to a super accumulation account where the earnings on the excess will be taxed at 15%.  Alternatively, the excess amount may be paid out to you as a lump sum. However, this rectification action will not be possible if you are receiving a non-commutable income stream (including a defined benefit pension). If you are receiving a retirement income stream, and the excess amount is $100,000 or less at 30 June 2017, you have until 31 December 2017 to rectify this breach, otherwise a penalty tax may be applied.

Transition to retirement income streams

From 1 July 2017, earnings from assets supporting a transition to retirement (TTR) income stream will be taxed up to 15% and will no longer be tax-free. Members of TTR income streams will also not be able to treat their super income stream payments as lump sum payments for taxation purposes.

What does this mean?

You should inform your income stream provider as soon as you have satisfied a condition of release, including permanently retiring from the workforce or reaching age 60 and ceasing gainful employment. Your pension will then be in the retirement phase where the earnings on the assets supporting the income stream will be tax exempt, and the value of the pension will count towards your transfer balance cap.

You will see tax adjustment transactions on your 2017/18 Annual Statement for your TTR income stream (for example ANZ Smart Choice Pension), to account for the tax that is being paid on earnings from 1 July 2017.

You should decide whether a TTR income stream is still appropriate for you after 30 June 2017, by discussing this strategy with your ANZ Financial Planner and tax adviser.

Anti-detriment payments abolished

The anti-detriment payment on death benefits from super is abolished where the death occurs from 1 July 2017. If the death occurs before 1 July 2017, the death benefit payment must be made before 1 July 2019 to receive the anti-detriment payment. The anti-detriment payment represents a refund of the tax paid on super contributions by the late member, where the death benefit is paid to their spouse, former spouse or child. 


The information provided is believed to be current as at the time of publication but no guarantee is provided. Changes in Government policy and legislation may dramatically alter the information provided. The information provided is of a general nature only and does not take into account your personal objectives, financial situation or needs. You should consider whether this information is appropriate for you, and speak to your ANZ Financial Planner and taxation adviser prior to making any financial decisions. Examples shown on this website are for illustrative purposes only.

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