Introduce a lifetime cap on non-concessional superannuation contributions
On 15 September 2016, the Government announced that this proposed measure will not proceed and has been replaced with a new proposal, lowering the annual non-concessional contributions cap.
Details of the new measure can be found here.
In the May 2016 Budget it was announced that from 7.30pm (AEST) on 3 May 2016 there would be a lifetime cap of $500,000 on non-concessional superannuation contributions.
The lifetime cap would have taken into account all non-concessional contributions made on or after 1 July 2007.
The lifetime cap would have been indexed to the Average Weekly Ordinary Time Earnings (AWOTE), increasing in $50,000 increments.
If an individual had exceeded the cap prior to commencement, they would have been taken to have used up their lifetime cap but would not have been required to take the excess out of the superannuation system.
If an individual had made contributions after commencement that caused them to exceed their cap they would have been notified by the ATO to withdraw the excess from their superannuation account.
Individuals who chose not to withdraw the excess amount would have been subject to the current penalty arrangements.
Non-concessional contributions made into defined benefit accounts would have been included in an individual’s lifetime non-concessional cap.
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On 15 September 2016, the Government announced that this proposed measure will not proceed and will be replaced with a new proposed measure to lower the annual non-concessional (post tax) contributions cap.