Selling down IPs each year step by step

They've lowered the cap, removed the work test for older folks, removed the 10% rule for everyone and added a carry forward rule on caps for those making under their maximum concessional contributions. All of these are for concessional contributions, aka tax deductible contributions.

The 500k lifetime cap changes from a $180k annual non-concessional cap that previously exists. Non-concessional contributions are after tax contributions and not tax deductible.

You're confusing the non-concessional lifetime cap policy with the concessional roll forward contribution changes which both use the $500k amount (one is for the contribution amount and the other is the member balance) and as a result coming to the conclusion you can get a deduction for a non-concessional contribution.

 

Ok I think I now understand. So assuming once the changes come into effect. Would the following example be correct?

Concessional Super contribution FY 17-18 = $10K
Concessional Super contribution FY 18-19 = $10K
Concessional Super contribution FY 19-20 = $10K
Concessional Super contribution FY 20-21 = $10K
Concessional Super contribution FY 21-22 = $25K + $60K (4 x $15K) = $85K (catchup from previous years)

Hence, I could put in $85K pre-tax provided my super balance is under $500K? Allowing me to reduce my taxable income significantly?

Cheers,
Oracle.

 

I thought the only limit for concessional was the $1.6M cap. ie. the $500k only affects the non-concessional...?

Also, under the new rules you can get a tax deduction for non-concessional. Upto the $25k non-concessional limit, you pay 15% tax on the contribution but get a tax deduction on the whole contribution (before the 15% I can only assume although I haven't seen the ink).

Also, my vague reading of the "new rules" (no ink yet) mean you can do $25k concessional (ie. salary sacrificing) AND $25k of the old non-concessional (but which has become an after tax contribution which then is taxed at 15% but is also a tax deduction). This seems definitely like double-dipping, getting $50k p.a. possibly, so I reckon I've got it wrong...

 

Yep, assuming your member balance is under 500k you'd be able to do that.

You could also put 500k in non-concessional at any point in that period if you've not used any of the cap but no deduction for this amount (it goes in tax free though and income it earns will be taxed at only 15% moving forward, so still can be very beneficial to use).

You're confusing the many different changes here.

The 1.6m is to do with how income in the fund is treated once you are in a pension phase, essentially being a cap on how much of the member balance can become entirely tax free once pension phase is started.

The 500k applies to two separate scenarios, one being a lifetime non-concessional cap (dated back to July 1 2007) which are the after tax and non-deducted contributions.

The other is the member balance you must be under to use the roll forward rule as the above example by @oracle demonstrates.

You will be capped to a 25k concessional contribution (this includes employer contributions) each year regardless of age. You will be able to make a concessional contribution and claim a deduction though with greater ease. You can't double dip.

Once you pay that 15% tax entering the super fund it is a concessional rather than non-concessional contribution.

 

They have something like this in the US don't they, they sell one investment and as long as they put it into another investment no tax?

Would be nice here but no deal