As you may be aware, super contribution rules and limits are set to change from 1 July 2017.
While you mightn't be able to put as much money into super due to these changes, the good news is there are still opportunities you could take advantage of before the financial year ends.
Why does super matter?
- The government has projected that in 40 years the number of people aged over 100 will be 300 times what it was in the mid-1970s.1 With that in mind, many Australians will need to fund a longer retirement and more super savings could make a difference to the lifestyle you lead in the years after you finish working.
- For many Australians, super will be one of the largest assets they have when they retire, next to the family home.
- To make super attractive, it is usually taxed at a lower rate than your income. This means you could end up with more money than if you put your retirement savings elsewhere.
The changes and opportunities explained
Summary of the super cap changes
|Contribution||Age||Current cap||Cap from 1 July 2017|
|Before-tax||Under 50||$30,000 per annum||$25,000 per annum|
|After-tax||Under age 65||$180,000 per annum /
Up to $540,000 under the
|$100,000 per annum/
Up to $300,000 under the
Before-tax (concessional) super contribution opportunities
There’s an opportunity to contribute an additional $5,000 in before-tax super contributions than what will be possible once the cap is reduced on 1 July 2017.
After-tax (non-concessional) super contribution opportunities
There’s an opportunity to contribute $80,000 more in after-tax super contributions than what will be possible when the cap is reduced on 1 July 2017.
Other ways you could benefit
If you're a low or middle-income earner and make after-tax contributions to your super fund, you may be eligible to receive a co-contribution, which is where the government will make a contribution of up to $500 into your super fund.
If your total income is equal to or less than $36,021 and you make personal contributions of $1,000 to your super account, you’ll receive the maximum co-contribution of $500.
If your total income is between $36,021 and $51,021 your maximum entitlement will reduce progressively as your income rises.
Note, other eligibility criteria does apply and you will not receive any co-contribution if your income is equal to or greater than the higher income threshold.
The Low Income Super Tax Offset
From 1 July 2017, the Low Income Super Tax Offset will be introduced, replacing the Low Income Super Contribution, which offered the same incentive.
What this means is individuals who have an income that doesn’t exceed $37,000 will receive a refund into their super account of the tax paid on their before-tax super contributions up to a cap of $500.
Currently, an individual contributing to their spouse’s super account is entitled to a maximum tax offset of $540 if certain requirements are met.
From 1 July 2017, the government will increase access to the spouse super tax offset by raising the lower income threshold for the receiving spouse from $10,800 to $37,000.
Things to keep in mind
- Contributions must be received by 30 June 2017 to take advantage of existing cap rules but check with your super fund to confirm their processing cut-off date.
- If you contribute money that exceeds the super cap limits, additional tax and penalties may apply. You can set up notifications in My AMP to let you know when you’re nearing your limit.
- The value of your investment in super can go up and down. Before making contributions, make sure you understand any risks associated with your chosen investment option.
- The government sets general rules about when you can access your super, which will generally be between the ages of 55 and 60 depending on when you were born.
We’re here to help
For more details about the changes and how you can take advantage of opportunities, see our info page, which also includes a short video, featuring Dr Shane Oliver, Chief Economist at AMP Capital.
Meanwhile, here are some other things you may want to do:
- If you’re interested in making contributions to your super, learn more about the types of contributions you can make
- If you want to boost your super via salary sacrifice contributions, bearing in mind this would reduce your take home pay, see what a little extra could mean for you with our handy tool
- If you think you’ve lost track of your super, let us find it for you at no charge
- If you’re an AMP customer, login to My AMP to check your super balance.
For further assistance regarding how the changes could impact you, speak to your financial adviser. If you need help finding an adviser, call us on 131 267 or use our find an adviser tool.
Find my lost super
When you change jobs or move, your super fund can lose contact with you. Wherever your super happens to be, we can find it for you.
Saving for a realistic target for retirement makes it more of a molehill rather than a mountain to be climbed.