Superannuation reforms – tranche 3 – reducing non-concessional contributions limit from $180k to $100k pa and simplifying ‘release authority’ provisions

On Friday 14.10.16, the Government released Tranche 3 of the draft legislation to implement its 2016-17 Budget superannuation reforms: exposure drafts of the Treasury Laws Amendment (Fair and Sustainable Superannuation) Bill 2016 and the relevant Explanatory Memorandum are available on the Treasury Consultation Hub website. Tranche 3 includes:

  1. Reducing the annual non-concessional contributions cap from $180,000 to $100,000pa (or $300,000 over 3 years for those under age 65); and
  2. Simplifying the regime for ‘release authorities’ (explained below).

Tranche 3 of the draft legislation follows the previous 2 tranches released on 7 September 2016 and 27 September 2016.

Reducing the non-concessional cap from $180,000 to $100,00 pa etc.

Schedule 3 to the Bill will do the following:

  • amend the annual non-concessional contributions cap from $180,000 to $100,000 (which is subject to indexation based on average weekly ordinary time earnings (AWOTE)). Under the 3 year ‘bring forward rule’ a member could contribute $300,000 in non-concessional contributions.
  • introduce a requirement that an individual must have a total superannuation balance each year of less than the general transfer balance cap ($1.6 million in the 2017-18 financial year) to be eligible to make non-concessional contributions up to the cap. This $1.6m limit will be indexed to CPI in $100,000 increments.
  • prevent payment of the government co-contribution in respect of an individual who is not eligible to make non-concessional contributions (that is members with a superannuation balance over $1.6m).

Simplifying ‘release authorities’


10.1 Schedule 10 to the exposure draft of Treasury Laws Amendment (Fair and Sustainable Superannuation) Bill 2016 (the Bill) amends the tax law to simplify and consolidate the range of existing processes for the release of amounts from individuals’ superannuation using a release authority.


10.4 In general, individuals are only entitled to withdraw amounts of superannuation held by superannuation providers if they have satisfied a ‘condition of release (Division 6.3 and Schedule 1 to the Superannuation Industry (Supervision) Regulations 1994 (SIS Regulations) and Division 4.3 and Schedule 2 to the Retirement Savings Account Regulations 1997 (RSA Regulations)). Conditions of release include retiring after attaining preservation age or attaining age 65.

10.5 The presentation of a release authority is a special condition of release for amounts held in complying superannuation funds and retirement savings accounts (see the tables in Parts 1 and 2 of Schedule 1 to the SIS Regulations and the table in Schedule 2 to the RSA Regulations.).

10.6 In conjunction with these regulations, the Income Tax Assessment Act 1997 (ITAA 97) and Schedule 1 to the TAA 1953 allow (and in many cases require) the superannuation provider that receives a release authority to pay an amount and reduce the value of the member’s superannuation interest despite the normal restrictions on such payments.

10.7 Prior to the amendments different types of release authorities were available if an individual had:

  • excess concessional or non-concessional contributions;
  • a Division 293 tax liability or a debt account discharge liability; or
  • an excess non-concessional contributions tax liability.

10.8 There were a number of differences in the operation of these release authorities, including:

  • the entity that provided the release authority to the superannuation provider: which could be the Commissioner of Taxation (Commissioner) or the individual;
  • the time for the provider to comply; and
  • the entity to whom the amounts were released.

Policy background

10.9 As part of the Superannuation Reform Package announced in the 2016-17 Budget, the Government is revising the framework for release authorities to make it simpler, more consistent and easier for individuals and superannuation providers to comply with.

[Treasury – Superannuation Reforms & Consultation Hub] [Treasury: Tranche 3 – Draft Bill & Draft EM] [LTN 199, 14/10/16]