On 15 September 2016, the Coalition Government announced that it will not proceed with its 2016-17 Budget proposal for a $500,000 lifetime cap on non-concessional contributions (backdated for contributions since 1 July 2007).
Instead, the Government has now proposed an annual non-concessional contributions cap of $100,000pa (down from the current $180,000 cap). Individuals under age 65 will still be able to use the 3-year “bring forward” rule for non-concessional contributions (ie $300,000 over a 3-year period). Individuals with a superannuation balance of more than $1.6m will no longer be eligible to make non-concessional (after tax) contributions from 1 July 2017. This limit will be tied and indexed to the proposed $1.6m transfer balance cap for retirement accounts (ie pension phase). This $1.6m eligibility threshold will be based on an individual’s balance as at 30 June the previous year.
According to the Government, individuals will be able to contribute a total of $125,000 per year, being $25,000 of concessional contributions plus $100,000 of non-concessional contributions, until they reach $1.6m. If taking advantage of the “bring forward” rule, a total of $325,000 could be made in any one year, the Treasurer said.
In addition, as part of the Coalition’s compromise on its superannuation package, it will not proceed with the Budget proposal to remove the work test for making contributions between ages 65-74. The Government also announced that the start date for the proposal to allow catch-up concessional contributions for superannuation balance less than $500,000 would be delayed to 1 July 2018 (instead of 1 July 2017).