Information Guide No 2.
The CGT cap amount for non-concessional contributions is $1.480m for 2018-19 (up from $1.445m).
The concessional contributions cap is $25,000 for 2018-19 (unchanged from 2017-18). As the concessional cap is now only indexed in $2,500 increments on the Australian weekly ordinary time earnings indexation factor, it is not expected to increase to $27,500 until 2023.
The non-concessional contributions cap (which is set at 4 times the concessional cap) is also unchanged at $100,000 for 2018-19 (or $300,000 under the bring-forward rule over 3 years).
While the super guarantee is frozen at 9.5% until 1 July 2021, the “maximum contribution base” will rise to $54,030 per quarter from 2018-19 (up from $52,760 for 2017-18). An employer is not required to provide the minimum super guarantee support for that part of an employee’s ordinary time earnings (OTE) above the quarterly maximum contribution base (ie $54,030 for 2018-19). This quarterly maximum represents a per annum equivalent of $216,120 for 2018-19.
The Government co-contribution “lower income threshold” is $37,697 for 2018-19 (up from $36,813 for 2017-18); the “higher income threshold” is $52,697 (up from $51,813).
The following indexed thresholds apply for 2018-19:
- superannuation lump sum low rate cap – $205,000 (up from $200,000).
- untaxed plan cap – $1.480m (up from $1.445m).
- ETP cap amount – $205,000 (up from $200,000).
- genuine redundancy and early retirement payments – tax-free amounts: base amount – $10,399 (up from $10,155); service amount – $5,200 (up from $5,078).
The general transfer balance cap will remain at $1.6m for 2018-19 (unchanged from 2017-18). This also means that the “defined benefit income cap” of $100,000 pa is unchanged for 2018-19. Likewise, the “total superannuation balance” threshold of $1.6m is unchanged for 2018-19.
First home super withholding tax and downsizer contributions.
Regulations have been registered to enable super funds to accept “downsizer contributions” and prescribe a withholding tax rate of 17% for amounts released under the First Home Super Saver (FHSS) Scheme.
First home buyers are permitted to withdraw super contributions (made from 1 July 2017) to pay for a first home deposit. The scheme allows first home contributions up to $15,000 per year (and $30,000 in total), subject to the contribution caps. Withdrawals from 1 July 2018 are taxed at marginal rates less a 30% offset. If the ATO cannot make an estimate of the individual’s marginal tax rate, the regulations require the Commissioner to withhold 17% of the assessable FHSS released amount. Any difference in the amount withheld and the actual tax liability will be refunded through the assessment process.
The regulations also amend the contribution rules in the SIS Regs to enable super funds to accept downsizer contributions from individuals aged 65 and older who do not otherwise satisfy the work test (or are 75). Eligible individuals can make additional non-concessional contributions up to $300,000 from the proceeds of selling their home where the contract is entered into on or after 1 July 2018.
Information provided by the Institute of Public Accountants15th March 2018.
Please contact us should you require further explanation or assistance.
For a more detailed explanation you can also refer to the ATO website.
Gregory Asher Sernack
FSL License Number 484657
Level 2 Unit 10 33 Kinsellas Drive
LANE COVE NSW 2066
Gregory Asher Sernack. M Comm MIPA AFPA AFSL
Gregory Sernack Financial Services is a personalized financial services practice run solely by the principal, Gregory Asher Sernack, a CERTIFIED PUBLIC ACCOUNTANT and member of the Australian Institute of Public Accountants, holder of a Master of Commerce degree and an Australian Financial Services License No 484657.Gregory Sernack is a member of the Financial Planning Institute and the Financial Ombudsmen Services.The holding of this financial services license required meeting stringent statutory requirements regulated by the Australian Investment and Securities Commission. We are somewhat unique in that we provide therefore not only accounting but also financial services.
Gregory Sernack is licensed to provide advice under a Limited Australian Financial Services License (AFSL) as a recognised public accountant to give general advice for Financial Planning and Superannuation. Information provided is of a general nature and is based on factual information and is not intended to imply a recommendation or opinion about a financial product or course of action..
Please be advised that (a) that the advice has been prepared without taking into account clients objectives, financial situation or needs; (b) the client should, therefore, consider the appropriateness of the advice, in light of their own objectives, financial situation or needs, before acting on the advice; and (c) the advice does not relate to the acquisition, or possible acquisition, of a particular financial product. If the client is considering a particular product, the client should obtain a Product Disclosure Statement (PDS) (if required) relating to the product and consider the PDS before making any decision about whether to acquire the product: s949A (2).