The Australian Government has taken a positive step for superannuation in their release of the ‘Superannuation 2.0 Reforms’ last week. This is a beneficial outcome for us as financial planners and our Australian expat clients alike, providing some degree of clarity and certainty for us all.
One of the greatest results of the revised superannuation reforms is the removal of the $500,000 lifetime non-concessional cap, which would have meant that each individual was capped at contributing $500,000 in after-tax dollars into his/her superannuation fund. If approved, this will allow more of our clients to utilise their superannuation portfolios to provide a tax-efficient retirement income during their ‘golden years’.
The other key proposals in the Superannuation 2.0 Reforms include:
- Non-Concessional Contribution Cap: This will be reduced from $180,000 per annum to $100,000 per annum. The 3 year provision allowing clients to contribute $540,000 in one year and nothing further for the following two years will remain in place, however on the lower amount. Therefore, clients will be able to contribute $300,000 instead of $540,000.
- Concessional Contributions Tax: Currently, those earning over $300,000 per year pay an additional tax under Division 293, resulting in an extra 15% tax payable on contributions. This income threshold will be reduced to $250,000 per year.
- Work Test: The Government has decided that they would no longer remove the work test for those aged over 65. Previously, it was proposed that the work test would be removed for those aged between 65 to 74 in allowing them to make super contributions.
- Concessional Contributions Cap: The cap on concessional contributions is proposed to reduce to $25,000 per year, from the current $30,000 per year (if under 49 and $35,000 per year (if 49 or over).
If these proposed changes are legislated, most will take effect from 1st July 2017. Whether you’re an Australian resident or Australian expat living abroad, it’s important that you seek professional advice to ensure that you won’t be unnecessarily penalised with the proposed changes and that you’re maximising the benefits that are available to you.
To Your Financial Success!
Jarrad Brown is an Australian-trained and qualified Fee-Based Financial Planner with Australian Expatriate Group, division of Global Financial Consultants Pte Ltd providing specialist financial advice and portfolio management services to international and local professionals in Singapore.
Australian Expatriate Group is the trusted fee-based financial advice provider for Australian expatriates living in Singapore and throughout Asia-Pacific. Licensed by Global Financial Consultants in Singapore, our team is Australian-trained, experienced and qualified, allowing us to provide specialist advice to Australians living abroad.
To learn more about how we may be able to help you, please contact us:
✆ +65 8282 5702
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General Information Only: The information on this site is of a general nature only. It does not take into account your individual financial situation, objectives or needs. You should consider your own financial position and requirements before making a decision.