Superannuation changes: what you need to know - MGD
20 January 2017

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2017 is going to be a big year for superannuation. Due to the complexities and time-constraints surrounding the upcoming changes, we have had numerous enquiries and so we thought it worth outlining what changes you should make note of and what you can do to make sure you’re taking advantage of them before 1 July 2017. As end of financial year nears, it is highly recommended you get your super in order sooner rather than later.

As is always the case in the financial world, everybody’s circumstance is different and there is no ‘one size fits all’ solution – each case needs to be individually assessed. Over the coming months, we will be hosting complimentary information sessions which run through these changes and the different options available to those whom the changes impact. If you are interested in attending these sessions, please let us know via

Below we have outlined the changes particularly of note and what they mean.


$1.6 million cap on all new and existing pension accounts

From 1 July 2017, there will be a cap of $1.6 million on all new and existing pension accounts. If your pension account balance exceeds $1.6 million, you have two options. The first option is to transfer the excess back into accumulation phase (where earnings are taxed at 15%). The second option is to withdraw the excess and invest it outside of superannuation (where earnings will be taxed at your individual marginal tax rate).

If this change does not affect you or your partner currently, it is worth keeping in mind this also applies to reversionary pensions where the total amount after the transfer of one pension to the other must remain below $1.6 million.

What can you do? If you currently have more than $1.6 million in your pension account, or you anticipate to in the future, there are a number of strategies that will allow you to make the most of this cap, depending on your circumstances. Equalisation of accounts between members may be possible in some cases, however there are a number of conditions that need to be met in order for this to be effective. It would be best to seek professional advice to ensure you meet the criteria. Another strategy is to withdraw the excess from your pension account and invest it in Insurance Bonds (which we are now referring to as the next best tax structure outside of superannuation). Not only are these tax effective, but they are flexible, accessible and a valuable estate planning tool to bequest wealth outside of the estate. Once again, the benefits of this strategy depend on your circumstances.


Cut in annual concessional contributions

The annual concessional contributions cap will be reduced from $30,000 to $25,000. Concessional contributions are those made into self-managed superannuation funds (SMSFs) and are taxed at 15% (often referred to as ‘contributions tax’). Concessional contributions include employer contributions and personal contributions, made by members for which the member can claim an income tax deduction.

What can you do? Maximise your super contributions. Before 1 July, it would be a good idea to reconsider your salary sacrifice arrangements to make sure you make the most of the current cap while you still can. If you are in a position to make concessional contributions, and you don’t or you leave it too late, you will lose a valuable tax-planning opportunity. However, the challenge lies in making sure you don’t fall into the potentially costly trap of exceeding the cap. This is where professional guidance will come in handy.


Cut in annual non-concessional contributions

The annual non-concessional contributions cap will be reduced from $180,000 to $100,000. Non-concessional contributions are those made into SMSFs that are not included in the fund’s assessable income. This includes personal contributions made by members for which no income tax deduction is claimed as well as any excess concessional contributions for the financial year.

It is also worth noting that from 1 July, individuals with a balance of or in excess of $1.6 million prior to 30 June 2017 will no longer be eligible to make non-concessional contributions into the fund. If their total balance is between $1.4 million and $1.6 million, they may be eligible to make contributions, however, will be ineligible for the 3 year bring-forward of $300,000 next financial year.

What can you do? Those eligible for the bring-forward rule may want to take advantage of this and contribute up to their full three years’ worth on non-concessional contributions, which totals $540,000, as this will essentially be their last chance before the changes take place and the bring-forward cap is reduced to $300,000.


The removal of tax exemption for Transition to Retirement Income Streams

The Transition to Retirement measure allows those eligible to access their superannuation without needing to retire. The Transition to Retirement Income Stream (TRIS) is an account-based pension from which up to 10% of the balance may be drawn as income each year under certain circumstances. TRIS pensions have long been an attractive option as they offer tax-free earnings on the pension balance and concessionally taxed income. However, from 1 July, these pension accounts will be taxed at the standard accumulation phase superannuation tax rate of 15% as opposed to being tax-free.

What can you do? Despite the loss of tax-free earnings, there are cases where TRIS pension accounts may still be beneficial and tax-effective for super members. It would be worth seeking professional advice to determine if maintaining your TRIS pension account is still worthwhile, or if there is an alternative tax-effective strategy that could be used instead.


For a full list of the Government’s superannuation reforms, click here.

For self-managed superannuation fund trustees, we have put together a short questionnaire to walk you through your essential trustee responsibilities and help you assess whether your SMSF fund is up to scratch, or if you need a hand to make sure it is before 1 July 2017.

As always, our team of specialists are here if you need a hand going through these changes, assessing how they may affect you and how to maximise your superannuation in light of these changes. Please don’t hesitate to give us a call on (07) 3391 5055 or email us at

Disclaimer: This article contains general information only and is not intended to constitute financial product advice. Any information provided or conclusions made, whether express or implied, do not take into account the investment objectives, financial situation and particular needs of an investor. It should not be relied upon as a substitute for professional advice.