Lifetime Superannuation Modeller - 2016 Federal Budget

January 27, 2017

Category: Modelling

The Lifetime Superannuation Modeller has been updated to reflect changes to the superannuation environment announced in the 2016 Federal Budget.

Changes that have been incorporated into the model are:

  1. Contribution thresholds
    A reduction in the concessional contribution threshold to $25,000 and in the non-concessional contribution threshold to $100,000.

  2. $1.6m transfer balance cap
    In the retirement phase, the model now maintain two accounts, a (tax-free) pension account and a (taxed) accumulation account. When considering how much a member may draw each year, the following approach has been adopted: minimum drawings are made from the pension account, and any additional drawings required in order to attain the individual's desired target income is drawn from the accumulation account.

  3. Transition To Retirement (TTR)
    Investment earnings on assets backing a TTR pension are now taxed.

  4. Non-concessional contributions
    Non-concessional contributions can only be made by individuals with a balance of less than $1.6m.
    One issue here is a member who is currently making (or who would like to model the impact of making) non-concessional contributions, who currently has a balance of less than $1.6m, but where the balance is projected to exceed the (indexed) cap at some stage before retirement.
    In the model, in each year over the projection period, the member's accrued balance is compared against the (indexed) cap. If the member's balance is below the cap the model allows for any non-concessional contributions in that year. However in any year where the member's balance is greater than the cap, non-concessional contributions are assumed to cease from that time on.

  5. Division 293 tax
    The income threshold for the Division 293 tax on concessional contributions has been reduced from $300,000 to $250,000.

  6. Low Income Superannuation Tax Offset
    The Low Income Superannuation Contribution (LISC) had been scheduled to be abolished from June 2017. It now continues under a slightly different name, the Low Income Superannuation Tax Offset (LISTO).

For further information, please visit the website for the Lifetime Superannuation Modeller.