Authors: Editors of the Australian Master Financial Planning Guide 2016/17 – 19th Edition
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Set out below is an overview of the changes affecting the broad and dynamic financial planning industry.
In particular, major superannuation reforms, flagged in the 2016 Federal Budget, are the most extensive reforms proposed for superannuation since 2007.
In addition, changes to taxation, social security, personal risk insurance and compliance will impact financial planning strategies for advisers, corporations and small businesses as well as retirement planning for individuals.
- The threshold at which high-income earners pay additional contributions tax is proposed to be lowered to $250,000 from 1 July 2017.
- The annual cap on concessional superannuation contributions will also be reduced to $25,000.
- It is proposed that the tax exemption on earnings of assets supporting Transition to Retirement Income Streams will be removed from 1 July 2017.
- A lifetime non-concessional contributions cap of $500,000 may be introduced.
- The current restrictions on people aged 65 to 74 making superannuation contributions for their retirement is proposed to be removed from 1 July 2017.
- Individuals with a superannuation balance less than $500,000 may be allowed to make additional concessional contributions where they have not reached their concessional contributions cap in previous years, with effect from 1 July 2017.
- It is proposed that from 1 July 2017, all individuals up to age 75 will be allowed to claim an income tax deduction for personal superannuation contributions.
- A low income superannuation tax offset (LISTO) may be introduced to reduce tax on superannuation contributions for low-income earners from 1 July 2017.
- The income threshold for the receiving spouse (whether married or de facto) of the low income spouse tax offset may be increased to $37,000 from 1 July 2017.
- A balance cap of $1.6m on the total amount of accumulated superannuation an individual can transfer into the tax-free retirement phase is proposed to be introduced from 1 July 2017.
- The anti-detriment provision in respect of death benefits from superannuation may be removed from 1 July 2017.
- It is proposed that the small business entity turnover threshold will be increased from $2m to $10m from 1 July 2016 for the purposes of accessing certain existing income tax concessions. The increased threshold will not apply for the purposes of accessing existing small business capital gains tax concessions.
- It is proposed that the company tax rate will be progressively reduced to 25% over 10 years.
- It was announced in the 2016 Federal Budget that the threshold at which the 37% marginal tax rate for individuals commences will increase from taxable incomes of $80,000 to $87,000 from 1 July 2016.
- From 1 January 2017, reductions to the social security assets test come into effect. This will mean that those receiving social security benefits may find their payments reduced.
- A new social security agreement with India has commenced.
Personal risk insurance
- Reforms to the structure and payment of adviser commissions are proposed to commence from 1 July 2016.
- Reform of the financial planning industry continues, with particular emphasis on the educational and professional standards of financial advisers.
Rates and thresholds
- Where available, all taxation, superannuation and social security rates and thresholds will be provided for 2016/17.
The Australian Master Financial Planning Guide 2016/17 – 19th Edition will keep you up to date with all the latest developments, enabling you to optimise your financial planning strategies and capitalise on tax opportunities.