More than four million people will benefit from the superannuation tax changes coming into effect from 1 July 2017, with about 3.1 million to receive the Low Income Superannuation Tax Offset (LISTO).
The LISTO replaces the Low Income Superannuation Contribution that was legislated to cease on 30 June 2016. Its revival, under another name, in last year’s budget was most welcome.
It provides a refund of contributions tax for anyone earning up to $37,000, up to a maximum of $500.
The Association of Superannuation Funds of Australia (ASFA) CEO Dr Martin Fahy estimates about 63 per cent of the beneficiaries will be women.
“They can expect to receive around $260 on average, which is a good help because the average super balance of recipients is less than $50,000,” he said.
Around 15 per cent of the recipients of the LISTO are aged 30 to 39.
Dr Fahy said about 850,000 people would benefit from the ability to claim a tax deduction for personal contributions to super.
A tax deduction will be available for anyone between 18 and 75 years of age who makes a personal contribution. If you are aged more than 65, you must meet the work test to make a contribution. Previously most salary and wage earners could only claim a tax deduction under salary sacrifice arrangements, which not all employers offer.
Around 10,000 people a year will benefit from the enhanced spouse contribution. This provides a tax offset for spouse contributions if your spouse earns less than $40,000, up from $13,800.
Dr Fahy said about 800,000 individuals in a given year will be affected by other changes announced in the 2016 budget.
“Up to 400,000 people could be affected by the reduction in the concessional contribution cap to $25,000 a year and a higher rate of tax on contributions for those earning $250,000 or more,” he said.
Currently more than 250,000 people make contributions of more than $25,000 a year. A similar number will be affected by the higher rate of tax on contributions when income and contributions are more than $250,000 a year.
ASFA estimates around 110,000 people, many in self-managed super funds (SMSFs), will be affected by the new $1.6 million transfer cap.
Around 170,000 people in APRA-regulated funds with a Transition to Retirement pension and a further 100,000 with such a pension arrangement in a SMSF will be affected by the new rules.
An estimated 80,000 will be affected by the $100,000 a year cap for non-concessional contributions, down from $180,000 a year.
Dr Fahy urged consumers to get ready for the new super rules if they haven’t already.
“Talk to your fund and make sure you understand how the new rules will impact you including any potential benefits,” he said.
“In addition, now is the time to chip in that extra money to your super before the new contributions caps apply on 1 July 2017.”
For further information, please contact:
Teresa Mullan, Media Manager, 02 8079 0806.
ASFA is the peak policy, research and advocacy body for Australia’s superannuation industry. It is a not-for-profit, sector-neutral and non-party political, national organisation. ASFA’s mission is to continuously improve the superannuation system so people can live in retirement with increasing prosperity.