Martin Breckon

This change will also remove the contentious provisions that would look back and take into account contributions made since 2007. Neither the Coalition backbench nor the ALP Opposition were ever persuaded that the lifetime cap proposal as announced in the 2016 Budget was not retrospective.

Dropping the $500,000 lifetime cap and removing its contentious retrospectivity is likely create a one-off opportunity for clients to contribute this year under the current non-concessional contributions cap of $180,000 or $540,000 (using the current bring forward rules). The proposed new non-concessional contributions cap will apply from 1 July 2017.

Under the current rules, a client under age 65 who has not already triggered the “bring forward” rules can contribute up to $540,000 in this financial year without breaching the non-concessional contributions cap. This is $240,000 more non-concessional contributions than will be permitted from 1 July 2017.

Also the Treasurer’s new changes will prohibit a client from making non-concessional contributions after 1 July 2017 where their account balance is over $1.6 million. If a client already has $1.6 million in superannuation and had intended to make further non-concessional contributions, he/she can make non-concessional contributions this financial year, before the commencement of the new rules.

These opportunities will depend on how the new legislation is drafted. If the Government (as expected) takes a simple approach to amending the current tax legislation, clients will be able to contribute this year under more generous rules. Draft legislation on changes to the con-concessional contributions cap are expected later this year.

By Martin Breckon, Technical Services Manager

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