Certain superannuation thresholds are set for a small boost from 1 July 2019 thanks to the latest indexation factors published by the Bureau of Statistics. While the concessional and non-concessional contribution caps are unchanged, the capital gains tax (CGT) cap amount and the employment termination payment (ETP) cap will both increase.
This is welcome news for those who can defer the receipt of certain superannuation benefits until after 1 July 2019.
Given the recent tightening of the superannuation concessions, any incremental tax saving from indexation is welcome and should be factored into financial planning decisions.
The “CGT cap amount” for non-concessional contributions will increase by $35,000 to $1.515 million for 2019-20, up from $1.480 million for 2018-19. The CGT cap amount is an important concession that allows people to make a personal contribution to super from the disposal of small business assets that qualify for the CGT small business concessions.
The CGT cap is not counted towards the non-concessional cap so it enables further contributions above the $1.6 million total superannuation balance limit. The increase in the CGT cap means that eligible individuals will be able to squeeze an extra $35,000 per person into their superannuation from 1 July 2019.
The concessional contributions cap of $25,000 will remain unchanged for 2019-20. This cap is now only indexed in $2,500 increments. The non-concessional contributions cap is also unchanged at $100,000 for 2019-20 (or $300,000 over 3 years, subject to transitional rules).
While the super guarantee is frozen at 9.5% until 1 July 2021, the “maximum contribution base” will rise to $55,270 per quarter from 2019-20, up from $54,030 for 2018-19.
The Government co-contribution “lower income threshold” is set to increase to $38,564 for 2019-20, while the “higher income threshold” is $53,564. A maximum co-contribution of $500 is payable for people with incomes up to the lower income threshold, phasing down for incomes up to the higher income threshold.
The “lump sum low rate cap” will increase to $210,000 for 2019-20 (up from $205,000). This is an individual’s lifetime cap on the amount of taxable components of any lump sums they receive that are eligible for a lower, concessional tax rate.
Talk to us today about incorporating the increased super thresholds into your financial planning decisions from 1 July 2019. An easy way to boost your retirement nest egg is to make the most of the tax benefits on offer and enjoy the compounding returns over the long term.