Our July 2006 Newsletter outlined the Government’s initial Budget proposals regarding contribution rules. The final rules and transitional arrangements were released on 5 September 2006.

• Concessional deductible contributions to superannuation will be limited to $50,000 per person per annum. These contributions will be taxed at 15%. A five year transitional period will apply for people who are aged 50 and above to allow those planning to retire soon to make concessional contributions of $100,000 per year.
  
  
• Personal superannuation contributions from an individual’s post-tax income (known as undeducted contributions) will continue not to be taxed when contributed and may be eligible for the Government co-contribution (as currently). These contributions will be limited to $150,000 per annum (this will remain at three times the level of the cap on concessional contributions and will increase as the concessional cap moves with indexation).
  
  
  • People under age 65 will be able to bring forward two years of contributions and make a larger contribution of $450,000 (but can then make no further contributions in the subsequent two years).
    
    
  • Transitional arrangements will apply between 10 May 2006 and 30 June 2007. There will be a transitional cap of $1 million for post-tax contributions made between 10 May 2006 and 30 June 2007. This will be available to all individuals eligible to contribute to superannuation in the relevant year and will include any contributions already made during that period. The annual cap of $150,000, and the ability to make larger contributions of up to $450,000, will commence on 1 July 2007.
    
    
• All contribution limits (except those related to transitional arrangements) will be indexed in $5,000 amounts.

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