2018 super changes to have on your radar

This year, employees who are ready to buy their first home or are preparing for retirement could be in for a boost, with some key super changes coming into effect.

Here’s a wrap-up of the upcoming changes and how they could affect your employees.

What’s taking place in 2018

Super tax incentives will be available for employees buying their first home

From 1 July 2018, eligible first home buyers will be able to withdraw voluntary super contributions, which they’ve made since 1 July 2017 (up to a certain limit) to put toward their first home.

Under the First Home Super Saver Scheme (FHSSS), first home buyers who make voluntary contributions of up to $15,000 per year into their super can withdraw these amounts, in addition to associated earnings, from their super fund to help with a deposit on their first home.

If eligible, the maximum amount of contributions that can be withdrawn under the scheme is $30,000 for individuals or $60,000 for couples.

Due to super’s favourable tax treatment, this initiative may help your employees to build a deposit on their first home more quickly.

Older employees looking to downsize will be able to put more into super

Currently, employees who are aged between 65 and 75 must satisfy a work test to make voluntary super contributions, while those over 75 are generally unable to contribute to their super.

From 1 July 2018, this will change. Those aged 65 or over will be able to make an after-tax contribution to their super of up to $300,000 with the proceeds from the sale of their family home. This is regardless of their work status, or super balance.

Meanwhile, both members of a couple can take advantage of this incentive, meaning $600,000 per couple can be contributed toward super.

To qualify, the property sold needs to have been your employee’s (or their spouse’s) main place of residence, owned for at least 10 years and contracts for sale exchanged on or after 1 July 2018.

Change to personal super contributions deductions

Before 1 July 2017, individuals (mainly who were self-employed) could claim a deduction for personal super contributions. Certain conditions had to be met, such as the requirement that less than 10% of their income coming from salary and wages. This is known as the 10% maximum earnings test.

From 1 July 2017, this 10% maximum earnings condition was removed for the 2017-18 and future financial years. This means that most people who are eligible to make personal contributions can now claim a tax deduction for personal super contributions.

This change means that this is the first tax year that your employees have more flexibility in using their concessional contributions cap. However there are certain requirements that need to be met – your AMP Account Manager can help you educate employees on what’s involved.

What happened in 2017

As we announced in the November edition of Employer news, 2017 saw the introduction of many legislative changes to Australian businesses, including significant changes to super.

Some of the key changes which could impact your employees were changing the concessional contributions cap and changes to the non-concessional contributions cap.   

Still have questions?

To find out how super changes could affect your employees, encourage them to speak to their financial adviser.

If they don’t have an adviser but would like some advice, they can call us on 131 267 or you can point them to our find an adviser search engine.

You can also keep track of upcoming changes in 2018 and refer to what changed last year to help keep your employees up-to-date.

1 Super Guide – 300,000 retired Australians to lose some or all age pension entitlements paragraph 1, 3

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