- From 1 July 2017, the threshold at which high income earners pay additional contributions tax (Division 293) will be lowered from $300,000 to $250,000.
- The Government will also reduce the annual cap on concessional (before‑tax) superannuation contributions to $25,000 (currently $30,000 under age 50; $35,000 for ages 50 and over).
Details of the $25k concessional contributions cap measure
From 1 July 2017, the Government will lower the annual concessional contributions cap to $25,000 for all individuals. The cap will index in line with wages growth.
Until this time the existing concessional caps ($30,000 for those aged under 50 and $35,000 for those people aged 50 and over) will apply.
Most Australians will not be affected by the lower cap.
- The median Australian worker currently makes annual concessional contributions to their superannuation of around $4,500 per year.
- In 2017-18 the lower cap will affect about three per cent of superannuation fund members.
Those who are affected will have average incomes of around $200,000 and average superannuation balances of around $760,000
Details of the $250k reduced threshold for 30% contributions tax
The Government will reduce the income threshold, above which individuals will be required to pay an additional 15 per cent tax on their concessional contributions, from $300,000 to $250,000 per annum.
The additional tax is imposed on the whole amount of the contributions, up to the concessional cap, if your salary and wages are above the threshold. Otherwise, the additional tax is only imposed on the portion of the contribution that takes you over the threshold.To be liable for a total of 30 per cent tax, a person would need to have at least $250,000 in combined income and concessional superannuation contributions.
- In 2017-18 approximately one per cent of fund members are expected to pay additional contributions tax as a result of this measure.
- These individuals will have an average taxable income of $270,000 and an average superannuation balance of $550,000.
Existing processes for the administration of the concessional contributions caps and the imposition of the additional 15 per cent tax on contributions, including the ability to withdraw the excess from super to pay the additional liability, will be maintained.