The Treasurer, the Hon Scott Morrison, handed down his first Federal Budget, stating that this was not just a budget but an economic plan for the future. The winners are low and middle income earners, unemployed youth and small business, and there are significant changes to superannuation.
Indeed one of the key planks of this Budget, is a comprehensive bundle of changes to superannuation – in the government’s words; they want to create a more sustainable super system by better targeting super tax concessions. Initially some detailed questions exist regarding a number of the proposed measures, and answers may need to await draft legislation.
Ultimately, planning opportunities are expected to arise from this.
2016 Federal Budget Summary
The key initiatives in this year’s Federal Budget are:
- A lifetime cap on non-concessional (after-tax) superannuation contributions of $500,000 will apply from 7.30pm on 3 May 2016.
- The income tax threshold at which the 37% tax applies will increase to $87,000 pa on 1 July 2016, from the current $80,000 pa.
- The tax rate that applies to small business companies will reduce to 27.5% for businesses with a turnover up to $10 million in 2016/17. Further tax concessions will apply in future financial years.
- The annual cap on concessional (pre-tax) super contributions will reduce to $25,000, regardless of age.
- Concessional super contributions may exceed the annual cap if certain conditions are met.
- Those aged between 65 and 74 will be able to make super contributions regardless of whether they work or not.
- Tax deductions will be able to be claimed for personal contributions regardless of employment status.
- A lifetime limit of $1.6m will be placed on the amount of superannuation that can be transferred to start pensions.
- Earnings on investments held in ‘transition to retirement’ pensions will be taxed at 15% (currently 0%).
Note: The measures outlined in this Federal Budget Summary are proposals only and may or may not be made law.
Read and view Godfrey Pembroke’s analysis below and find out what the 2016 Federal Budget means for you:
View below the 2016 Federal Budget Analysis video with Simone Collins (Senior Manager, Technical, BT Financial Group):
If you have questions regarding this year’s Federal Budget please contact us here.
Download the Federal Govt 2016 Budget Overview Documents using the links below.
Budget Overview – The Government’s economic plan to ensure Australia continues to successfully transition from the mining investment boom to a stronger, more diversified, new economy.
Tax and super – Making our tax system more sustainable so we can cover the Government’s responsibilities for the next generation.
Jobs and growth – Sticking to our national economic plan for jobs and growth in a stronger, new and more diversified economy.
Balancing the budget – Ensuring that the Government lives within its means balancing the budget and reducing the burden of long term debt.
In-depth – Strategy & Outlook
Download the Federal Govt 2016 Budget Strategy & Outlook papers from the links below:
Note: Other Budget Strategy & Outlook papers are available. We have selected those above as most likely to have relevance.
Budget 2016: Superannuation Fact Sheets
Click here to view a range of recently published Fact Sheets that attempt to concisely explain the new superannuation measures proposed in the recent Federal Budget.