The measure – From 1 July 2018, the Government will help people ‘catch‑up’ their superannuation contributions by allowing individuals with account balances of $500,000 or less to rollover their unused concessional caps (for up to 5 years) to use if they have the capacity and choose to do so.
[Note: this July 2018 commencement date is the delayed start date announced on 15 September 2016 – as part of the ‘cost offset’ for abandoning the $500k lifetime cap on non-concessional contributions (backdated to 2007).]
- In 2019‑20, this will help around 230,000 Australians who take time out of work, whose income varies considerably from one year to the next, or who find their circumstances have changed (e.g. mortgage payments or school fees have ceased) and are in a position to increase their contributions to superannuation.
- Individuals, aged 65 to 74, will also be eligible to use this ‘catch-up’ facility – provided they meet the work test.
[Treasury website – Super Changes]
The issue – The annual concessional (before-tax) superannuation caps currently offer little flexibility for those who take time out of work, work part-time, or have ‘lumpy’ income and therefore have periods in which they make no or limited contributions to superannuation.