While the concessional and non-concessional contributions caps will remain unchanged for the 2019-20 financial year, certain other important superannuation thresholds are set to increase from 1 July 2019.
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. At this current rate of wages growth, the concessional cap is not expected to increase to $27,500 until 2023.
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. An employer is not required to provide the minimum super guarantee support for that part of an employee’s ordinary time earnings (OTE) above the quarterly maximum contribution base. This quarterly maximum represents a per annum equivalent of $221,080 for 2019-20.
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. That is, a Government co-contribution up to a maximum of $500 is payable for a $1,000 personal super contribution.
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. Another cap affecting how much tax you pay on lump sum benefits, the concessionally taxed “untaxed plan cap”, will increase to $1.515 million.
The “ETP cap”, which allows concessional tax treatment of part of an employment termination payment, will increase to $210,000 for 2019-20 (up from $205,000). The tax-free amount for a genuine redundancy will increase to $10,638 (base amount) for 2019-20 plus $5,320 for each whole year of service.
The general transfer balance cap will remain at $1.6 million for 2019-20. This also means that the “defined benefit income cap” of $100,000 pa is unchanged.