The Government has released the second round of draft rules for the implementation of the superannuation reform package announced in the 2016-2017 budget, which includes draft legislation for the 5 year concessional contributions catch-up measure. The measure allows members to use unused concessional contributions caps from the previous 5 years, provided that their account balance is less than $500,000 as at 30 June in the prior year.
This measure was previously slated to commence from 1 July 2017 but has now been deferred until 1 July 2018.
The draft legislation refers to the new concept of “total superannuation balance” to measure the $500,000 limit. A member’s “total superannuation balance” will be made up of their “accumulation phase value”, “transfer balance account” and “roll-over superannuation benefit”.
This reform will be particularly useful for members who receive inconsistent income (for example, because of a capital gain or a bonus in a particular year) or who have low super balances and are looking to top up their super in a tax effective manner, perhaps as they near retirement age.
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