In the last 12 months significant changes have been made to superannuation and require extra care. You may wish to consider making the maximum allowed concessional contribution before the newly decreased concessional contribution cap of $25,000 per annum commences from 1 July 2017.

If you’re aged under 50 the concessional contribution cap for the 2016-17 financial year is $30,000  and $35,000 if you’re aged 50 or over. Any contributions made by your employer, salary sacrificed amounts and personal contributions claimed as a tax deduction by self-employed or substantially self-employed persons are considered concessional contributions.

If you’re making extra contributions to your super and breach the concessional cap, the excess contributions over the cap will be taxed at your marginal tax rate, although you can have the excess contribution refunded from your super fund.

Similarly, the annual non-concessional (post-tax) contributions cap will be reduced from $180,000 per annum to $100,000 and the three-year bring-forward provision reduced from $540,000 to $300,000, starting from 1 July 2017. There will also be an additional constraint that individuals with a balance of $1.6 million or more will no longer be able to make non-concessional contributions. Therefore, you may want to consider making the maximum allowed non-concessional contribution the mentioned changes are applied starting from 1 July 2017.

High-income earners should also be reminded that the contributions tax on concessional contributions is effectively doubled from the normal 15 per cent rate to 30 per cent if their combined income plus concessional contributions is above $300,000. The threshold for the higher rate of tax will be reduced to $250,000 effective from 1 July 2017.

Importantly, don’t leave it until 30 June to make contributions, as your super fund may not receive the contribution in time and it will then count towards next year’s contribution caps, which could result in excess contributions and an unexpected tax bill.

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