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Change to travel expenses for truck drivers

Source:  NTAA Practice Update - August 2017

For the 2017/18 income year, the reasonable amount for travel expenses (excluding accommodation expenses, which must be substantiated with written evidence) of employee truck drivers who have received a travel allowance and who are required to sleep away from home is $55.30 per day (formerly a total of $97.40 per day for the 2016/17 year).

If an employee truck driver wants to claim more than the reasonable amount, the whole claim must be substantiated with written evidence, not just the amount in excess of the reasonable amount.

Source:  NTAA Practice Update - August 2017

From 1 July 2017, GST applies to imported services and digital products from overseas, including:

  • digital products such as streaming or downloading of movies, music, apps, games and e-books; and
  • services such as architectural, educational and legal.

Australian GST registered businesses will not be charged GST on their purchases from non-resident supplier if they:

  • provide their ABN to the non-resident supplier; and
  • state they are registered for GST

However, if Australians purchase imported services and digital products only for personal use, they should not provide their ABN.

 

Small Business 2017

Small Business 2017

The small business asset write off up to $20,000 has now been extended to 30 June 2018.  The deduction is used for each asset that costs less than $20,000 whether new or second hand.

From 1 July 2017:

  • The tax rate for small business is reduced to 27.5%
  • For sole traders, partnerships and trusts, there is a 8% small business tax offset (up to $1,000 limit) for those with a turnover of less than $5 million.
  • The small business turnover threshold has now been increased to $10 million (previously $2 million).  This means more businesses can access a range of small business concessions including the $20,000 instant asset write off and reduced company tax rate.

The reduced company tax rate of 27.5% will progressively apply to companies with turnover less than $50 million by the 2018-19 income year. 

 

Source:  NTAA - Practice Update August 2017

From 1 July 2017, GST applies to imported services and digital products from overseas, including:

  • digital products such as streaming or downloading of movies, music, apps, games and e-books; and
  • services such as architectural, educational and legal.

Australian GST registered businesses will not be charged GST on their purchases from a non-resident supplier if they:

  • provide their ABN to the non-resident supplier; and
  • state they are registered for GST.

However, if Australians purchase imported services and digital products only for personal use, they should not provide their ABN.


2017 Work Related Expense Claims

Source:  NTAA - Practice Update

The ATO is increasing attention, scrutiny and education on work-related expenses (WREs) this tax time.

Assistant Commissioner Kath Anderson said: "We have seen claims for clothing and laundry expenses increase around 20% over the last five years.  While this increase isn't a sign that all of these taxpayers are doing the wrong thing, it is giving us a reason to pay extra attention."

Ms Anderson said common mistakes the ATO has seen include people claiming ineligible clothing, claiming for something without having spent the money, and not being able to explain the basis for how the claim was calculated.

"I heard a story recently about a taxpayer purchasing everyday clothes who was told by the sales assistant that they could claim a deduction for the clothing if they also wore them to work," Ms Anderson said.

"This is not the case.  You can't claim a deduction for everyday clothing you bought to wear to work, even if your employer tells you to wear a certain colour or you have a dress code."

Ms Anderson said it is a myth that taxpayers can claim a standard deduction of $150 without spending money on appropriate clothing or laundry.  While record keeping requirements for laundry expenses are "relaxed" for claims up to this threshold, taxpayers do need to be able to show how they calculated their deduction.

The main message from the ATO was for taxpayers to remember to:

  • Declare all income;
  • Do not claim a deduction unless the money has actually been spent;
  • Do not claim a deduction for private expenses; and
  • Make sure that the appropriate records are kept to prove any claims.

 

More than one-third of Australian pensioners are living below the poverty line, making the country among the worst performers in the world for the financial security of older people.


The findings of the OECD report, Pensions at a Glance 2015, compared Australia to 33 other countries.


Australia was ranked second lowest on social equity, with 36 per cent of pensioners living below the poverty line, which the report defined as half the relevant country's median household income.


Australian pensioners fared better than their counterparts in South Korea, where 50 per cent live below the poverty line but performed poorly against the OECD average of 12.6 per cent.


The report, released last month, found the Australian government contributes less to old-age benefits than other OECD countries. The Australian government spends 3.5 per cent of GDP on the pension, below the OECD average of 7.9 per cent.


The findings are backed up by the Global Age Watch Index 2015 report card which rates countries by how well their older populations are faring


It ranked Australia lowest in its region on income security, due to the high rate of old age poverty and pension coverage which is below the regional average.


Paul Versteege?, senior research and advocacy adviser with the Combined Pensioner and Superannuants Association, said the base Australian pension rate was low compared to median household incomes


"There are huge discrepancies among retirees in various countries," he said.


"In Australia there is quite a large group that has to subsist on the age pension as its only source of income. In spite of pension reform and recent increases to the pension, the base pension is still quite low for singles."


The annual payment for a single person is about $22,000 and $34,000 for a couple, with 2.25 million Australians claiming the pension.


Council on the Ageing chief executive Ian Yates said the report challenged perceptions that the entitlement was too high.


"Claims that the age pension is somehow too extravagant and unsustainable do not bear out," he said.


"We have always argued for progressive improvements to the pension but at the moment an increase to the pension is highly unlikely and more focus ought to go towards building superannuation contributions."


Chief executive of Vision Super Stephen Rowe said he was "staggered" by the findings of the OECD report, saying it painted a bleak picture for many older Australians.


"Are we generous enough with the pension? I don't think so."


He said that Australians retiring now have not received the full benefit of compulsory superannuation contributions, introduced in 1992, but were grappling with rising living costs.


"The basic cost of living in Australia is quite high, compared with  some other OECD countries," Mr Rowe said.


Chief executive of National Seniors Michael O'Neill said the pension had gone backwards in real terms and many older people had not accumulated enough superannuation to supplement the benefit.


"In terms of sustainability, the report confirms that Australia spends substantially less than the OECD average on pensions," he said.

"In fact, our pension spend has dropped and plateaued since 2000. Against other countries, our proportion of pensioners living below the poverty line is startling."


2017 Tax Planning

 

Individuals

  • Top tax bracket earners can celebrate the end of the temporary budget repair levy from 1.7.2017, giving you an effective tax cut of 2%
  • If you owed tax last year or received a large refund, you may want to adjust your tax withholding with your employer for the upcoming tax year to avoid excessive refunds or nasty surprises
  • If you are feeling generous, make donations to registered charities before the 30th June. To be tax deductible, it must be an outright donation, not a raffle or toy
  • Consider topping up super contributions by salary sacrificing – review your concessional contribution limits – the compound impact of earnings on even small increases to super are substantial over your working life
  • Consider prepaying next year's interest on your negatively geared investment property
  • If you've made a capital gain this year, consider selling any under performing investments that trigger a capital loss within the same tax year
  • If you have earned a side income from ebay, gumtree, air b and b, uber etc, please talk to us about the tax treatment of this income
  • If you want to claim your car travel, be sure you have a valid logbook, otherwise we can only use the km method to claim for your car up to 5000 km
  • Consider the superannuation changes – see below under superannuation. 


Superannuation

  • From 1 July 2017, the condition of having to have less than 10% of income come from wages in order to claim a concessional super contribution as a tax return deduction will be removed. This opens up opportunities for those who want to make deductible contributions to super from their own money or from business earnings in a sole trader structure.
  • From 1 July 2017 taxpayers with an income up to $ 37,000 will receive a (LISTO) contribution to their fund equal to 15 % of their total concessional contributions of the year up to $ 500
  • From 1 July 2017, there is a new $ 1.6 million cap on the total amount that can be transferred into the tax free retirement phase for superfund account based pensions, excess assets move back into accumulation mode
  • Up to 30 June 2017, taxpayers earning over $ 300,000 will trigger the Division 293 tax ( an additional 15% tax imposed on the amount over the threshold). This reduces to $ 250,000 from 1.7.2017, catching more taxpayers into this net.
  • The current non concessional contributions limit of $ 180,000 reduces to $ 100,000 from 1.July 2017. This is a big change impacting the baby boomer generation. Talk to us before end of June, if this impacts you. It has a dramatic effect to those eligible to access the bring forward rules.
  • Members with a total super balance of over 1.6 million for the 2018 financial year, who make contributions in the new tax year, will have excess non-concessional contributions. There are some complex rules affecting those with balances close to $ 1.6 million, who still wish to make contributions, so talk to us, before making further contributions.
  • The concessional contributions limit is dropping from the current $ 30,000 to $ 25,00. 
  • For those with super savings of less than $ 500,000, they will be able to access their unused concessional contributions cap on a rolling basis for five years. Talk to us if this affects you.
  • Transition to retirement income streams are no longer tax exempt from 1.7.2017. Earnings from assets supporting a TRIS will be taxed at 15 % regardless of when the TRIS was commenced.


Business:

On 23 May 2017, the ATO announced the 15-16 Budget changes are now law.

From 1 July 2017
  • The tax rate for small businesses is reduced to 27.5 %
  • For sole traders, partnerships and trusts, there is a 8 % small business tax offset ( up to $ 1000 limit) for those with a turnover of less than $ 5 million.
  • The small business turnover threshold has now been increased to $ 10 million ( previously $ 2 million). This means more businesses can access a range of small business concessions including the $ 20,000 instant asset write off and reduced company tax rate.

The Federal Budget 2017-18 proposed an extension to the asset write-off program to 30.6.2018. So watch this space as legislation is being tabled. For now, you can rely on the small business asset writeoff up to $ 20,000 to 30thJune 20117.


Other things you might consider :

  • Prepay expenses - includes insurance, utilities or professional subscription
  • Maximise super contributions up to concessional contributions limits, this can include sole traders, provided that wages income is less than 10 % of total income
  • Write off bad debt - keep records of actions you have taken to recover the debt
  • Make sure you pay your employee's super on time and in a way that is super stream compliant. You can bring forward payments due in July relating to June wages, by paying them before 30 June.
  • Conduct a stocktake and write down inventory to lower cost or realiseable market values.


 Some general tips to make your business reporting easier:

  • Set reminders for due dates throughout the year
  • Separate your business and personal finances
  • Go paperless - this will save you space and there are a host of tools available to allow you to access your records from anywhere
  • Migrate to a cloud software - we recommend Xero or MYOB, this enables us to help you in real time, any time when you are stuck with a transaction. It enables us to keep you focused on regular business reviews with up to date accounts at least monthly in a "live environment". This enables a true partnership between us to ensure your business success.
  • Visit the small business tax room. This is a great ATO iniative to keep you informed https://www.ato.gov.au/newsroom/smallbusiness/



 

2017 Budget

Budget 2017 

CPA Australia

Produced in association with CCH

 

Budget 2017.pdf

Source:  In The Black, CPA Australia

By Jan McCallum

Find out if you're a winner or a loser from this year's Federal Budget.

Australia's Government is optimistic about the prospects for the global and Australian economy, said Federal Treasurer Scott Morrison in delivering his budget speech last night.

Morrison said the nation was moving towards the end of a difficult period, with signs of global recovery "and there is potential for better days ahead".The relatively upbeat comments set the tone of a budget with a theme of "fairness, security and opportunity" that combined cuts to welfare with significant infrastructure spending and moves to help first-home buyers.

CPA Australia welcomed the investment in infrastructure, an extension of the instant asset write-off for small business and a new Medicare Guarantee Fund to increase health funding to an ageing population.

Morrison has placed government spending on target to get the budget into a A$7.4 billion surplus in 2021, and says from 2018/19 the government will no longer be borrowing to pay for everyday expenses.

With forecast economic growth of 2.75 per cent in 2017/18 that has meant winners and losers in this year's budget.


Winners

Entrepreneurs/self employed

The government is retaining the popular small business instant asset tax write-off at A$20,000 for another 12 months. It had been due to fall to A$1000 from June 30. CPA Australia and business groups have been pushing for the higher level to be retained, arguing the ability to write off up to $20,000 in the same year equipment was bought is a real boost to business cash flow. 

The measure applies to businesses with annual turnover of up to A$10 million.

Regional Australia

The Government will establish a A$472 million Regional Growth Fund to support regional communities. This includes A$200 million to support a further round of the successful Building Better Regions program.

It will inject A$8.4 billion in equity to the Australian Rail Track Corporation to fund the Melbourne to Brisbane Inland Rail project with work starting in 2017/18

 

The property industry

The housing market gets a boost from the new First Home Super Savers Scheme allowing first home buyers to save for a home through their superannuation fund, contributions and earnings taxed at 15 per cent, rather than their marginal rates. Withdrawals will be taxed at their marginal rate, less 30 percentage points.

Contributions will be limited to A$30,000 per person in total and A$15,000 per year.

The government will also allow people aged 65 or over to make a non-concessional contribution into their super of up to A$300,000 from the proceeds of selling their principal residence. The incentive is designed to free up larger homes.

The government plans to step up release of Commonwealth land for housing. It has barely touched negative gearing but tightened some rules on deductions.

Infrastructure and engineering

This is a big spending, big project budget, with A$75 billion earmarked for infrastructure spending in the next 10 years. This includes a new Western Sydney Airport, with work starting in the second half of next year. 

In addition, Morrison announced a A$10 billion National Rail Program to upgrade rail around the country.

Health

A higher Medicare levy will channel funds into the health sector, with Morrison announcing the National Disability Insurance Scheme (NDIS) will be fully funded. 

There will also be extra funding for mental health and veterans' mental health.

Losers

Taxpayers

All taxpayers will pay a higher Medicare Levy, rising from 2 per cent to 2.5 per cent from 1 July 2019. The increase is expected to raise A$8 billion to fund health care.

Banks

Bank customers will be able to take complaints to a new Australian Financial Complaints Authority. Bankers might feel they have dodged a bullet because the Authority is likely to be preferable to a Royal Commission into the banking industry. 

Morrison also announced tighter controls over bank executives, higher fines for misconduct and a new permanent Australian Competition and Consumer Authority task force to investigate competition in the banking and financial system.

A new 6 basis-point levy on the liabilities of the five major banks, starting July 1, will raise A$6.2 billion for budget repair

Foreign property buyers

Foreigners will lose the main residence capital gains tax exemption on their Australian homes. If they buy property and fail to occupy or lease it, they will pay an annual A$5000 levy.

Developers will be prevented from selling more than 50 per cent of new developments to foreign investors.

Welfare recipients

Welfare recipients will face tougher obligations, including a new demerit point system for people who miss job interviews.

Employers of foreign workers

Employers will pay an annual foreign worker levy of A$1200 or A$1800 per worker per year on temporary work visas and a A$3000 or A$5000 one-off levy for those on permanent skilled visas.

Multinational companies

The government is toughening the Multinational Anti-Avoidance Law to extend the rules to structures involving foreign partnerships or trusts and clamping down on aggressive structuring using hybrids

Source:  Australian Government Budget 2016

 

The issue

Superannuation tax concessions are intended to encourage people to save for their retirement. They are not intended to provide people with the opportunity for tax minimisation or for estate planning. As the earnings from retirement phase superannuation accounts are tax-free they are a very desirable investment choice for individuals. Limiting the amount that can be transferred into a tax-free retirement account will make the superannuation system more fiscally sustainable and increase confidence that the settings are consistent with the objective of superannuation.

 

The details

From 1 July 2017, the Government will introduce a $1.6 million cap on the total amount of superannuation that can be transferred into a tax-free retirement account.

• Like the Age Pension, the cap will index in line with the consumer price index. The transfer balance cap will increase in $100,000 increments.

• Superannuation savings accumulated in excess of the cap can remain in an accumulation superannuation account, where the earnings will be taxed at 15 per cent.

• A proportionate method which measures the percentage of the cap previously utilised will determine how much cap space an individual has available at any single point in time. ? For example, if an individual has previously used up 75 per cent of their cap they will have access to 25 per cent of the current (indexed) cap.

• Subsequent fluctuations in retirement accounts due to earnings growth or pension payments are not considered when calculating cap space.

• Following consultation, the Government commits to reviewing the impact of the transfer balance cap should there be a macroeconomic shock that substantially affects retirement incomes. The review would draw on advice from the Council of Financial Regulators and on actuarial advice to inform what response, if any, may be required.

 

Consequences for breach

Individuals who breach the cap will be required to remove the excess capital from their retirement phase account and will be liable to pay tax on the notional earnings attributable to the excess capital. The amount removed from the retirement phase can be transferred into an accumulation account, where the earnings will be concessionally taxed at 15 per cent, or withdrawn from superannuation.

Those individuals already in retirement as at 1 July 2017 with balances in excess of $1.6 million will need to either:

• transfer the excess back into an accumulation superannuation account; or

• withdraw the excess amount from their superannuation.

Transitional arrangements will apply for existing account holders. Individuals can also apply to the Commissioner of Taxation to replenish their transfer balance cap space for anomalous situations that cause their retirement balance to be depleted, such as fraud, bankruptcy or family law splits. Where a fund moves an asset back to an accumulation account to comply with the introduction of the transfer balance cap before 1 July 2017, the fund will have the option of resetting that asset's cost base to its current market value. This will ensure that tax will not be applied to gains that accrued while the asset supported a retirement phase interest. Where an asset is already partially supporting an accumulation account, the fund will have a capital gains tax liability on the non-exempt proportion of the unrealised gains. The liability can be paid immediately or deferred until the asset is sold.


Impact

Very few people will be affected by this proposal. The average superannuation balance for a 60-year old Australian nearing retirement is $240,000 and less than one per cent of fund members will be affected by the balance cap. The details of the broadly commensurate treatment for members of defined benefit schemes are in Superannuation Fact Sheet 5.

 

Budget Impact

The measure is estimated to improve the underlying cash balance by $1.8 billion over the forward estimates.

Cameo - Jason

Jason is 60 and plans to retire during the 2017- 18 financial year. Jason expects he will have an accumulated superannuation balance of less than $1.6 million. This measure does not affect Jason.

Cameo - Agnes

Agnes, 62, retires on 1 November 2017. Her accumulated superannuation balance is $2 million. Agnes can transfer $1.6 million into a retirement income account. The remaining $400,000 can remain in an accumulation account where earnings will be taxed at 15 per cent. Alternatively, Agnes may choose to remove this excess amount from superannuation. While Agnes will not have the ability to make additional contributions into her retirement account, her balance will be allowed to fluctuate due to earnings growth or drawdown of pension payments.

 

QUESTIONS AND ANSWERS

$1.6 million transfer balance cap

When does the measure start?

  • The $1.6 million transfer balance cap will commence on 1 July 2017.

Is the $1.6 million transfer balance cap retrospective?

  • No. The Government is simply limiting the amount that benefits from the tax-free retirement phase from 1 July 2017.
  • Earnings in retirement phase accounts will remain tax-free.
  • By the time the new rules apply, individuals who have retirement balances in excess of the transfer balance cap will have had time to transfer any excess into the concessionally taxed accumulation phase, where earnings are taxed at 15 per cent, or out of the superannuation system.

Can I make more than one transfer?

  • Yes, individuals will be able to make transfers in the retirement phase as long as they have available cap space.
  • The amount of the cap space an individual has available will be determined by the proportionate method which measures the percentage of the cap previously utilised.

How many people will this affect?

  • It will affect less than 1 per cent of Australians with a superannuation account.
  • The average superannuation balance of a 60-year old Australian nearing retirement is $240,000.

What if I have more than one superannuation retirement account? Is it $1.6 million per account?

  • No, the cap applies to the total amount of superannuation that has been transferred into the retirement phase, it does not matter how many accounts these balances are held in.
  • Similarly, for individuals already in retirement prior to 1 July 2017, the cap applies to the total amount held in the retirement phase, it does not matter how many accounts these balances are held in.

What sort of income and living standards will I have with a $1.6 million balance in retirement?

  • A balance of $1.6 million is approximately twice the level of assets at which a single homeowner currently loses entitlement to the Age Pension, and almost three times the 'comfortable standard' of the Association of Superannuation Funds of Australia.

Does the cap limit how much I can hold in my retirement phase account? What happens if my retirement account grows in excess of $1.6 million?

  • The cap only limits the amount you can transfer into a retirement phase account it does not apply to the balance on that account.
  • Your balance can grow above $1.6 million in your retirement phase account. The cap does not apply to this subsequent growth.

Once my retirement phase account balance falls below $1.6 million, can I transfer more?

  • An individual can transfer more into a retirement phase account only if they have not previously exhausted their cap. The amount of the cap space an individual has available will be determined by the proportionate method which measures the percentage of the cap previously utilised.
  • If, for example, an individual transfers the full $1.6 million into a retirement phase account which subsequently decreases the individual will not be able to transfer any more into the retirement phase as they have utilised 100 per cent of their cap space.
  • If an individual transfers $800,000 into a retirement phase account, they will have utilised 50 per cent of the cap space. If the cap is later indexed to, for example, $1.7 million, they will be able to transfer an additional 50 per cent of the indexed cap, being $850,000.

What happens if I make transfers in excess of the cap after 1 July 2017?

  • If an individual transfers amounts into a retirement phase account in excess of the cap, they will be required to remove the excess (including notional earnings on the excess capital). If they choose not to, their fund will be required to remove the excess on their behalf.
  • These amounts can be transferred back into an accumulation account, where the earnings on the excess will be taxed concessionally at 15 per cent. Alternatively, the excess can be withdrawn from superannuation.
  • For a first breach, individuals will be subject to a 15 per cent tax on the notional earnings.

What happens if I am already retired before 1 July 2017 and have a retirement phase balance in excess of $1.6 million?

  • Individuals already in retirement with retirement phase balances in excess of the cap at 30 June 2017 will be required to either: - withdraw these excess amounts from superannuation; or - transfer these excess amounts back into an accumulation account.
  • The earnings on funds in an accumulation account will be taxed at the 15 per cent concessional tax rate.
  • Transitional arrangements will apply for those above $1.6 million but at or below $1.7 million – individuals will have 6 months from 1 July 2017 to remedy the breach. If they comply, no further penalty is applicable.
  • Those who do not remedy the breach or who have balances above $1.7 million on 30 June 2017 will be subject to the consequences of their fund removing the excess and a tax on notional earnings on the excess capital.

What if I retired before 1 July 2017 and transferred less than $1.6 million at that time, but my balance has grown to $2 million through investment returns?

  • You will still need to comply with the cap. If your balance on 30 June 2017 is in excess of $1.6 million, you will need to remove the excess amount from your retirement account.

How will this cap apply to defined benefit pensions?

  • Different arrangements involving changes to the taxation of defined benefit pension payments will be adopted to achieve a broadly commensurate taxation outcome to that of the transfer balance cap.
  • Defined benefit pensions will not be required to be commuted and rolled-back if they are valued at over $1.6 million. Rather, defined benefit pension payments over $100,000 per annum will be subject to additional taxation to broadly replicate the effect of the $1.6 million transfer balance cap.

How will this cap apply to non-commutable pensions (commenced prior to 1 July 2017)?

  • Non-commutable pensions that commenced prior to 1 July 2017 will be treated the same as defined benefit pensions.

How will this cap apply to non-defined benefit, non-account-based income streams (started after 1 July 2017)?

  • Products such as lifetime annuities, market-linked pensions and annuities and term/life expectancy pensions and annuities will be valued using their purchase price.

How will this cap apply to future 'innovative' income stream products?

  • These products will be valued using their purchase price.
  • If a product is purchased with instalments during the accumulation phase or deferred from the point of purchase, it will be valued using an existing method requiring actuarial certification.
  • Collective defined contribution scheme pensions will be valued at the amount of the collective pool of fund assets attributed to the member on the day the pension commences and certified by an actuary.

Do transition to retirement income streams count towards the transfer balance cap?

  • No. As transition to retirement income streams (TRIS) will no longer receive an earnings tax exemption from 1 July 2017 they do not count towards the transfer balance cap

Can I still split my retirement phase interests to purchase or diversify my retirement income streams?

  • Yes. Once you have transferred your superannuation income streams to the retirement phase, they are not counted again towards your transfer balance cap.
  • To achieve this outcome, your transfer balance account will receive a 'debit' equal to the value of the amount commuted. This amount, plus any unused cap space, may then be used to purchase a new income stream or retirement product.
  • To ensure the integrity of this approach, you will no longer be able to use partial commutations to satisfy minimum drawdown requirements.
  • If you choose to commute your income streams (either in part or in full) you will receive a debit equal to the value of the commutation.

Do I need to pay tax on income from my retirement account? Or on the amounts that I withdraw from my accumulation phase account?

  • No. The Government has not changed the taxation treatment of amounts drawn down from superannuation accumulation accounts by people who have reached their preservation age. Superannuation benefits paid, either as an income stream or as a lump sum, from a funded source (that is, one in which taxes have been paid on contributions and earnings such as in an accumulation scheme or a funded Defined Benefit scheme), are generally tax-free for people aged 60 and over.
  • The earnings on amounts in an accumulation phase account are taxed at the concessional 15 per cent tax rate. Withdrawn funds are not taxed, providing the individual has reached age 60. There are no minimum (or maximum) drawdown requirements from accumulation accounts.

Will the $1.6 million transfer balance cap be indexed?

  • Yes. The cap will index in $100,000 increments in line with the consumer price index, just as the Age Pension assets threshold does.

Do structured settlements or personal injury payouts count towards the cap?

  • These amounts will not count towards an individual's transfer balance cap. This will ensure that individuals can continue to access these arrangements which support them in meeting their healthcare and living costs.

For couples where one spouse either does not have a superannuation account or has a low balance in their account/s can they have a joint $3.2 million cap?

  • The transfer balance cap is an individual cap. Each individual can transfer $1.6 million into their retirement phase account/s from their accumulation account/s.
  • An individual with more than $1.6 million in the retirement phase will need to either transfer the excess to an accumulation account where earnings will be taxed, or withdraw the excess from the superannuation system. Subject to the contribution caps, excess amounts withdrawn could be contributed to their spouse's account.
  • In the superannuation system, and most areas of tax, people are taxed and treated as individuals not as families or households.

 


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