Window of Opportunity to ‘Use it’ or ‘Lose it’ (before Super Reform kicks in)

‘Super’ opportunity exists for those individuals fortunate to take advantage of before end of June 2017 before big superannuation changes take effect.  

The Federal Treasurer’s announcement on Thursday 15 September 2016 regarding further superannuation reform measures re-opens the door for non-concessional superannuation contributions (NCCs), after more than four months of uncertainty on the issue.

gold eggs in nest from hay on table

  • Prior to this announcement, the May 2016 Federal Budget proposal of a $500,000 lifetime cap (taking into account all NCCs made from 1 July 2007) resulted in many financial services professionals and their clients refraining from making NCCs, pending legislation being introduced to, and passed by, Parliament.
  • However, the 15 September proposals change that position. The new NCC proposals will not be effective until 1 July 2017, so the current NCC rules (i.e. those which effectively applied prior to the May 2016 Federal Budget announcement) remain in operation throughout 2016/17.
  • The current rules allow NCCs of up to $180,000 per year and the opportunity for those who are under age 65 at any time in the 2016/17 income year to ‘bring forward’ an additional two years of annual NCC capacity. So, up to $540,000 of NCCs may be contributed before 1 July 2017.
  • The 15 September proposals reduce the annual NCC limit from $180,000 to $100,000 from 1 July 2017. The bring forward provision will still be available, but the maximum total NCCs will only be $300,000 unless the transitional rules apply. The following example illustrates the general operation of the new rules from 1 July 2017.

Example: operation of the new NCC rules

Sean, whose superannuation balance is $400,000, sells an investment property and makes a NCC of $200,000 in October 2017.

As Sean’s bring forward has been triggered, his remaining NCC capacity is $100,000. If a further NCC of $100,000 is made in 2018/19, no NCC can be made in 2019/20.

In 2020/21 Sean’s NCC caps will reset and further NCCs can be made from then.

New Rule for Non-Concessional Superannuation Contributions  

A new rule, also to apply from 1 July 2017, will remove eligibility to make NCCs where a client’s total super balance as at 30 June in the previous income year is more than $1.6 million.

So for some clients 2016/17 may be their last opportunity to make NCCs.

We have identified several client groups who may have a special interest in 15 September proposals:

  • Clients whose 65th birthday occurs in the period from 1 July 2016 to 30 June 2017
  • Clients who will have more than $1.6 million in super as at 30 June 2017
  • Clients who wish to transfer as much as they can into super as soon as they are able to.

Subscribe & don’t miss a single episode of Michael Yardney’s podcast

Hear Michael & a select panel of guest experts discuss property investment, success & money related topics. Subscribe now, whether you're on an Apple or Android handset.

Need help listening to Michael Yardney’s podcast from your phone or tablet?

We have created easy to follow instructions for you whether you're on iPhone / iPad or an Android device.


Prefer to subscribe via email?

Join Michael Yardney's inner circle of daily subscribers and get into the head of Australia's best property investment advisor and a wide team of leading property researchers and commentators.

David Hasib


David is Director of Chan & Naylor Financial Planning and founder of Patron Financial advice.

'Window of Opportunity to ‘Use it’ or ‘Lose it’ (before Super Reform kicks in)' have no comments

Be the first to comment this post!

Would you like to share your thoughts?

Your email address will not be published.


Michael's Daily Insights

Join Michael Yardney's inner circle of daily subscribers.

NOTE: this daily service is a different subscription to our weekly newsletter so...