A lifetime limit of $1.6 million (subject to indexation) will apply to the amount of superannuation that can be transferred into ‘retirement phase’ accounts. This limit applies to existing pensions and those commenced after 1 July 2017.
Amounts exceeding the $1.6 million transfer cap won’t have to be withdrawn from the super system. The excess amount can stay in the ‘accumulation’ phase where earnings are generally taxed at 15%, but in most cases the actual tax rate paid is a lot lower when deductible expenses, franking credits and other items are taken into account in the fund.
Capital gains tax relief may be available when converting money held in the retirement phase back into the accumulation phase to meet either of the above.
If you think you might be impacted by this measure you should speak to us today.