2016 Federal Budget Superannuation Reforms

With the Government abandoning its policy to introduce a $500,000 lifetime cap for non-concessional contributions are you clear on what non-concessional contributions you can make to superannuation now?

Non-concessional contributions are contributions that are made to super from after-tax income or savings.

Instead of going forward with its proposed $500,000 lifetime cap on after-tax contributions, the Government has decided to go back to the current rules for after-tax contributions but with a lower annual limit of $100,000.

This will now allow people to:

The ability to make non-concessional contributions will also be limited to people who have an individual superannuation balance of under $1.6 million. In addition, if you are aged 65 or over you need to pass the “work test” to contribute to your super and cannot bring forward contributions to the current year.

The new rules will apply from 1 July 2017. This means that for the current 2016-17 financial year people can still make non-concessional contributions of up to $180,000.

Stellar Super
New Safe Harbour Rules for Related Party LRBA’s
The Government has introduced new guidelines for Limited Recourse Borrowing Arrangements (LRBAs) within Self-Managed Superannuation Funds (SMSFs). We have outlined the changes with regards to property held within an LRBA.

Loan Condition Real Property LRBA Security Registered Mortgage
Interest Rate RBA standard variable housing loan for investors (5.75% for 2015/16) Personal Guarantees Not required
Term Of Loan Maximum 15 years Type Of Repayment Principal & Interest
Loan to Valuation Ratio (LVR) Maximum 70% (aggregate of all loans) Frequency Of Repayment Monthly

Please also note the following:

Stellar Self Managed Super


It is important to note that if the related party LRBA guidelines are not adhered to it does not immediately mean that the LRBA is not on commercial terms. If this is what has occurred then we will be required to prove that the LRBA are the same as those available from a commercial financier.