ATO releases 2016/17 Superannuation Thresholds

The good news is that two thresholds have increased.  The bad news is that the other thresholds have not.

The CGT contribution threshold has increased to $1,415,000 (up from $1,395,000).  This threshold is a lifetime threshold which applies to contribution arising from capital gains which have been subject to the small business 15 year or retirement concessions.  This is a lifetime concession cap which applies from 10 May 2006.

The “low rate cap amount” has been increased to $195,000 (up from $185,000).  This cap is a lifetime cap and applies to the taxable portion of superannuation lump sums which have been paid by reason of retirement or permanent incapacity before age 60.  If a superannuation lump sum is within the cap, the rate of tax will be reduced to zero.  The cap does not apply to superannuation lump sums received after age 60 as these are generally tax free.  

The bad news is that the concessional and non-concessional contribution caps have not been increased.  Consequently, the concessional contribution cap remains at $30,000 (or $35,000 if aged 49 or more) and the non-concessional contribution remains at $180,000.  This also means that the “bring forward” of non-concessional contributions remains at $540,000 (ie 3 years’ worth of non-concessional contributions).

Two other minor thresholds have been increased.  The first is the maximum super contribution base has increased to $51,620 (previously $50,810).  This base applies to each financial quarter and is the upper limit for quarterly salary on which an employer is required to make mandatory super contributions (ie the 9.5% super contributions).  Employers and employees can, if they wish, agree that the employer will make employer contributions on quarterly salary in excess of the maximum base amount.

The other threshold which has increased, is the threshold for entitlement to Government co-contributions.  This threshold has increased to $36,021 (previously $35,454).  If adjusted taxable income is less than the threshold, the Government will make a $1 super contribution for each $2 of after tax super contribution an individual makes.  The maximum co-contribution per individual is $500.  If adjusted taxable income exceeds $36,021, the maximum co-contribution reduces in proportion as adjusted taxable income exceeds that threshold.   In respect of the 2016/17 financial year, if adjusted taxable income exceeds $51,021 (the corresponding figure for 2015/16 financial year is $50,454) then no co-contribution will be paid.