Technical Corner – changes and opportunities for financial advisers

There are key changes around tax and superannuation which received the Royal Assent on 29 November 2016:

a $1.6 million cap on the amount of capital that can be transferred to the tax-free earnings retirement phase of superannuation;
Additional income tax rules on recipients of certain defined benefit income streams in excess of $100 000 per annum;
Reduction of the threshold at which high-income earners pay Division 293 tax on their concessional taxed contribution to superannuation to $250 000;
Transitional capital gains tax relief for superannuation funds that adjust their asset allocations before 1 July 2017. See draft Law Companion Guideline
Reduction of the annual concessional contributions cap to $25 000 and the annual non-concessional contributions cap to $100 000;
Introduction of criteria for an individual to be eligible for the non-concessional contributions cap and make minor amendments to the non-concessional contributions rules;
Removal of the anti-detriment deduction;
Amendment on how the maximum contribution base is determined;
Eligible low income earners to receive the low income superannuation tax offset;
Remove the requirement that an individual must earn less than 10 per cent of their income to be able to claim a deduction for personal superannuation contributions;
Enable catch-up concessional contributions;
Extend the spouse superannuation tax offset; and
Amend the earnings tax exemption for complying superannuation funds, retirement savings account providers and life insurance companies;

These changes provide an opportunity to financial advisers to review the following clients who have the following strategies in place: