Superannuation rules for the 2016/2017 year

Although the government announced significant amendments to Australia’s superannuation rules in this year’s Federal Budget, the majority of proposed changes will not apply for the 2016/2017 year.

Some of the key elements of super that will remain the same include:

Superannuation guarantee
No changes were made to Superannuation Guarantee (SG) rules for 2016/2017. Under the SG laws, employers must contribute the equivalent of 9.5 per cent of an employee’s ordinary times earnings to their super fund. The current annual SG rate of 9.5 per cent will remain in place until 30 June 2021.

Concessional contributions caps
The concessional contributions caps have not changed for 2016/2017. Those aged 48 years or under on 30 June 2016 have a concessional cap of $30,000, and those aged 49 years or over on 30 June 2016 have a concessional cap of $35,000.

Tax exemption for TTRPs
Until 30 June 2017, the investment earnings on a person’s super assets financing a transition-to-retirement pension TTRP are exempt from tax. From 1 July 2017, the government’s proposal of removing the tax exemption will affect existing and future TTRP recipients.

Low Income Super Contribution
The ATO will continue to pay the Low Income Super Contribution (a refund of contributions tax) for low-income earners (those who earn less than $37,000 per year). The threshold of $37,000 applies to a person’s ‘adjusted taxable income’, which includes non-SG concessional contributions, net investment losses and several other items.

Death benefits tax
The tax treatment of death benefits will remain the same. Dependants (spouses and children under the age of 18) will continue to receive death benefits tax-free, and non-dependants (financially independent adult children) will have to pay 15 per cent tax on the taxable component of the death benefit.