In a press release issued 15 September 2016, the government has announced a number of changes to three key federal budget proposals. Perhaps the most significant change announced today is that the government will not be proceeding with the proposed $500,000 lifetime non-concessional contribution (NCC) limit – but instead will reduce the existing NCC limits from 1 July 2017.



The government has announced a number of changes to some of the superannuation reform proposals first announced as part of the 2016 Federal Budget. Broadly, the changes announced include:

– replacing the proposed lifetime NCC limit with lower annual caps for NCCs, and restricting the ability to make NCCs to people with balances less than $1.6 million

– a deferral to the commencement date for the proposed carry forward arrangements for concessional contributions

– not proceeding with measures to increase the flexibility for contributions for people aged 65 – 74 (ie the work test will remain).
At this stage, draft legislation has not yet been released, and available details are limited. However, some detail has been provided through a series of fact sheets. A summary of some of the key details is provided below.


For the sake of completeness, it should be noted that at this time no additional details have been released with respect to a number of other proposals. This includes the proposed:

– $1.6 million Pension Transfer cap

– reduction to the Division 293 tax threshold

– reduction to the concessional contribution cap

– changes to the tax treatment of Transition to Retirement (TTR) income streams

– removal of the anti-detriment deduction.


Key details

  1. Lowering the annual non-concessional contributions cap

The government will not be proceeding with the proposed $500,000 lifetime NCC limit announced in the 2016 Federal Budget.
Instead, the government has announced that from 1 July 2017, the annual non-concessional contributions cap will be lowered to $100,0001. As is currently the case, individuals under age 65 will continue to be eligible to bring forward three years of non-concessional contributions (ie allowing NCCs of up to $300,000 using the bring-forward rules).
However, the government has also announced that from 1 July 2017, where an individual’s total superannuation balance is above $1.6 million they will no longer be eligible to make non-concessional contributions. That is, if an individual’s balance at the start of the financial year (the contribution year) is more than $1.6 million they will not be able to make any further non-concessional contributions.
Restrictions will also apply to an individual’s ability to trigger the bring-forward rules in a year where their NCC contribution will take them over the $1.6 million limit. Precise details of how these restrictions will operate have not yet been released.
Importantly, as a result of the announcement, the existing rules up to 30 June 2017 remain unchanged. Accordingly, the NCC limit for the 2016/17 year is $180,000 (or $540,000 where eligible to utilise the bring-forward rules). Further, for the current financial year, these limits are available regardless of an individual’s total superannuation balance.
Note: Transitional rules have been flagged in relation to people who are still in a previously triggered bring-forward period and have unused amounts at the end of the current financial year (eg say only $250,000 out of a possible $540,000 NCC had been contributed by 30 June 2017). The precise details surrounding these transitional arrangements have not yet been released.


1 This amount will be four times the concessional contribution cap. As such, in future years, this limit will be linked to indexation of the concessional contribution cap.


  1. Deferred commencement date for concessional contribution cap carry forward arrangements

The government had originally proposed that individuals with superannuation balances of $500,000 or less would be able to commence accruing unused concessional cap amounts from 1 July 2017, enabling them to carry these unused amounts forward for a maximum five years.


As part of the announcement, the commencement date for this measure has been deferred to 1 July 2018. As a result, individuals will only be able to start accruing unused concessional cap amounts arising from the 2018/19 year onwards.


  1. Not proceeding with the removal of the work test for individuals over age 65

During the 2016 Federal Budget announcement, the government had proposed to abolish the work test requirement for superannuation contributions made by, or on behalf of, individuals aged 65 – 74 (inclusive) from 1 July 2017.
As part of the announcement, the government has indicated that it will no longer be proceeding with this previously proposed measure.
As such, the current work test requirements, used to determine the eligibility for an individual to make superannuation contributions once they reach age 65, will continue to apply. That is, an individual who is aged 65 – 74 (inclusive) will need to have completed 40 hours of gainful employment, over a consecutive 30-day period during the financial year in which the contribution is being made, before they are eligible to make a contribution.
Future developments

Legislation containing the details surrounding these changes has not been released at this time.


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