Superannuation and Termination Tips
- Superannuation Guarantee Contribution remains at 9.5% until 2021.
- Proposed changes to super contribution caps:
- Non-concessional contribution cap to change from $180,000 per annum or three year cap of $540,000, to a lifetime cap of $500,000.
- Individuals with a superannuation balance of less than $500,000 will be allowed to make additional concessional contributions for unused cap amounts. The portion of the cap threshold not used in the previous year can be used within the next five years from 1 July 2017.
- No change this year to concessional contributions general cap for those aged 49 or under: $30,000; however this is set to reduce to $25,000 from 1 July 2017.
- No change to concessional contribution cap for those aged over 49 years on 30 June: $35,000.
- Higher rate of tax on concessional contributions for those with combined income of greater than $250,000.
- Superannuation maximum contribution base will increase from $50,810 per quarter to $51,620 per quarter from 1 July 2016.
- Government co-contributions: full contribution of $500 up to $36,021 per annum; pro-rata up to $51,021 at which point it cuts off. Proposed changes will end this system on 30 June 2017 and convert the co-contribution to a Low Income Superannuation Tax Offset up to a cap of $500.
- Proposed change to the work test for individuals aged 65 to 74 – only those over 75 will have to complete a work test from 1 July 2017.
- Lump sum A continues to be taxed at 32%.
- No change to ETP concessional tax of 32% if the employee is under the preservation age, (currently age 55), and 17% for employees who have reached preservation age. Where the ETP has exceeded the concessional tax threshold the excess will be taxed at the top marginal rate of 49%.
- Lump Sum D Threshold will increase to $9,936 plus $4,969 for each completed year of service from 01/07/2016.
- ETP cap threshold remains at $195,000 from 01/07/2016. The whole of income cap remains at $180,000 as this is a non-indexed figure.
The information provided here is of a general nature for Australia and should not be your only source of information. Please consult an experienced and registered tax agent as each small business’ circumstance will vary for end of financial year.