Superannuation changes 1 July 2017
Super is evolving, are you ready?
Changes were made to super on 1 July 2017 that affect super
contributions and the way super and retirement income is taxed.
Here we explain how the changes may affect you, whether you are
contributing to super, about to retire or already retired.
Who will the 2017 super changes
If you earn less than $40,000 or are self-employed you will
benefit from more flexible super contribution rules. If you are a
high income earner or have a large super balance there are new
contribution limits and a balance cap that will change how much you
can add to your super.
Video: The ATO explains who the 2017 super changes will
Super changes 2017 video
Watch this short ATO video to see if you are affected by the
2017 changes to super.
Low income earners (people earning
less than $40,000)
If you are a low income earner, work part time or don't have
constant income, it can be hard to save for retirement. Changes to
super tax offsets and more flexible super contribution arrangements
make it easier to add more to your super.
Spouse super contributions
If your spouse earns less than $37,000 pa and
you make a contribution to their super, you can claim a tax offset
equal to 18% of the contributions, up to $540. Even if they
earn up to $40,000, you could still be entitled to a partial super
tax offset. Other restrictions apply, however this change allows
couples to get greater benefits from adding to each other's
Case study: Emi boosts her super
Emi and Ken have two children who are still at school. Ken earns
$120,000 working full-time and Emi works part-time and earns
$30,000 a year. Emi had several years out of the workforce when
their children were young so her super balance is quite low.
Emi makes a non-concessional (after tax) contribution
of $20 to her super each week so that she can receive a government co-contribution of $500.
Because her income is low she will also receive a low income super
tax offset of $427 (15% of her employer contributions).
Ken would like to help Emi build her super. He
decides to contribute a further $100 a week in non-concessional
spouse contributions to her super fund. Ken will be able to claim a
tax offset of up to $540 for the spouse contributions he makes. So
while he is helping grow Emi's super he'll be reducing his tax bill
by $540 a year.
Low income super tax offset (LISTO)
Eligible taxpayers that earn up to $37,000 a year get an
additional super contribution from the Government, equal to 15% of
before tax (employer and salary sacrifice) super contributions, up
to $500. This is called the low income super tax offset
Carry your super cap forward
A new 'carry forward' rule for before tax (concessional)
contributions has been introduced that can help you catch up on
before tax contributions later.
If you've had time out of the workforce, work part-time or have
irregular work patterns and have contributed less than your before
tax (concessional) cap, you can rollover the unused portion of your
concessional contribution cap for up to 5 years, allowing you to
make additional contributions in future years.
High income earners (people
earning more than $250,000)
Higher income earners may be affected by a reduction in
both before and after tax contribution limits, see changes to personal super contributions below.
If your combined income and super contributions exceed $250,000
you may have to pay extra tax on the excess, this is known as Division 293
reduced in July from the previous
$300,000 threshold, meaning more higher income earners will
have to pay extra tax.
People who want to make extra
Many of the 2017 super changes affect personal super
contributions, including tax deductions for contributions,
contribution caps and eligibility for the Government's co-contribution.
Tax deductions for personal super contributions
Self-employed people and those that earn less than 10% of their
income from salary or wages, can claim a tax deduction for any
contributions they make to super. The contributions are then
treated as 'before tax (concessional) contributions'.
On 1 July 2017, the 10% rule was removed, making it
easier for more people to make use of their concessional
Before tax super contributions (concessional)
On 1 July 2017, the concessional contributions cap reduced to
$25,000 for everyone. This means the amount of contributions you
can make that are concessionally taxed has
However, you will be able to 'carry-forward' any unused
concessional contributions cap on a rolling 5 year basis. This
means carried forward amounts will expire after 5 years.
After tax super contributions (non-concessional)
The non-concessional contributions cap has
reduced from $180,000 to $100,000 per year. You will still be able
to bring forward up to three times the cap to make larger one-off
contributions, if you are under age 65 and have not reached the new
transfer balance cap. The full benefit you bring forward may not
apply if your total super balance is close to the balance transfer
Work out whether to make extra contributions before or after
Government super co-contributions
Low income earners who make after tax contributions to super may
be eligible for a Government co-contribution payment into their
super. This is calculated at 50 cents for every dollar you
contribute (up to $500).
In addition to the previous co-contribution eligibility
requirements, you must now also have a total superannuation
balance at the end of the previous financial year of less than the
transfer balance cap and not have exceeded your after tax
For example, if you have made personal after tax contributions
and have satisfied the current co-contribution eligibility
requirements, but have already reached your transfer balance cap,
then you will no longer be entitled to a Government
co-contribution. See government super
contributions for more information.
Retirees or those
The rules around retirement income streams have changed.
Transition to retirement (TTR) pensions are now less tax
effective and there is a cap on how much you can transfer into
a tax-free super pension. There are also new restrictions on the
way death benefit payouts are calculated.
Transition to retirement (TTR) pensions
From 1 July 2017, the earnings of a TTR pension will now
be taxed at up to 15%, the same as they are in a super
For example, if you had a TTR pension of $200,000 and the
investment earnings were $10,000 for the year, there was
previously no tax on those earnings. From July the earnings
will be taxed at up to 15%, or up to $1,500 in this example,
depending on the type of underlying investments.
The earnings of ordinary retirement pensions are still tax
Super transfer balance cap
If you are aged 60 or older, income payments from an account-based super pension are tax
free. On 1 July 2017, a limit was introduced on how much
super you can transfer to a tax-free account-based pension. This is
called the 'transfer balance cap' and has initially been set
at $1.6 million but will be indexed by CPI, rounded down to the
Only the unused portion of your cap will be indexed so once you
have reached the transfer balance cap you won't be entitled to
further indexation. You can have multiple transfers to pension
accounts as long as the total amount transferred into an
account-based pension is under the cap. Investment earnings will
not affect your transfer balance cap.
TTR pensions do not count towards your transfer balance cap
and there is no limit on how much you can have in your accumulation
Account-based pensions started before 1 July 2017 will be
counted towards the transfer balance cap on 1 July 2017. Pensions
started after this date will count towards the cap when they
If you exceed your transfer balance cap, you may have to remove
the excess funds and pay tax on the earnings related to the
Defined benefit pensions
Different tax rules apply to defined benefit
pensions as you usually can't transfer or remove excess amounts
from these income streams. Speak to your defined benefit pension
fund to see how the changes will affect you.
Super anti-detriment payment
An anti-detriment payment was a payment to dependent
beneficiaries of a deceased super fund member that represented a
refund of super contributions tax. A dependent beneficiary of a
deceased estate could request an anti-detriment payment be paid as
part of a super death benefit payout.
From 1 July 2017, this payment is no longer available as
part of a super death benefit payment. Super funds can still make
anti-detriment payments until 30 June 2019 for members who died
before 1 July 2017.
The July 2017 super changes are designed
to make the system fairer and sustainable but it's now more
important than ever to start planning your retirement income early.
Visit the ATO's super changes webpage for more
detailed information and examples of how you might be
Last updated: 22 Oct 2018