Sarah Wiedersehn
(Australian Associated Press)

Australian men are set to lose their bragging rights as the longest living males on the planet, according to international research.
Life expectancy projections for developed countries published in The Lancet show South Korea is winning the race for both sexes, knocking Australia from the top spot for men.
Of 35 developed nations, South Korea is likely to see the largest longevity gains by 2030, with female life expectancy likely to break the 90-year mark (90.8 years).
This is attributed to better childhood and adolescent nutrition, low smoking rates and better access to health care.
South Korean men jet to the top of the pack with a projected life expectancy of 84.1 years, just outlasting Australian men.
Australian boys born in 2030, the authors say, can expect to live to 84, four years longer than those born in 2010.
"There is an at least 95% probability that men's life expectancy at birth in these three countries will surpass 80 years in 2030, and 27% that it would surpass 85 years," the authors wrote.
As a result of the large gains made in South Korea, the country is likely to take "the life expectancy frontier position from Japan for women and catch up with the current global frontier country Australia for men", the authors said.
Australian girls born in 2030 can expect to live until they are 87.57 the sixth-longest projected life span behind South Korea, France, Japan, Spain and Switzerland.
Researchers at Imperial College London used age-specific death rates to calculate life expectancy at birth and at 65 years, and also the probability of dying before 70.
The modelling showed life expectancy is projected to increase in all 35 industrialised countries, with life expectancy projected to reach 90 in some nations.
It also predicts the female life expectancy advantage over men is likely to shrink in every country except Mexico.
Life expectancy in Australia has improved dramatically for both sexes in the past century, particularly life expectancy at birth.
According to data from the Australian Institute for Health and Welfare released in 2016, a boy born in 2013-15 can expect to live to 80.4 years and a girl 84.5 years.
The increasing life spans highlight the successes in public health and health care, said Professor Andrea Maier, a bio-gerontology specialist at the University of Melbourne.
But to ensure the healthcare system doesn't lose it's potency, people need to be taught how to live longer in a healthier way, she said.
"Otherwise we are just growing old as patients."
"It really matters how you behave in early age to prevent disasters at old age," she said.

(Australian Taxation Office)
8th February 2017

www.ato.gov.au/Individuals/Super/Super-changes/

The changes to the superannuation (super) system, announced by the Australian Government in the May 2016 Budget have now received Royal Assent. These changes were designed to improve the sustainability, flexibility and integrity of Australia's super system. Most of the changes will commence from 1 July 2017.

An overview of the changes is below. More detailed information is being progressively published to help you understand the changes, how they may affect you, and what you may need to know and do now, or in the future.

Keep informed about updates

Learn more about super

Some of the terms used in the super system are unique and you may not have come across them before. You can use our Glossary to look up key terms, alphabetically, if you need to.

Overview of super changes

• Spouse tax offset
• Personal super contributions deduction
• Low income super tax offset contribution (LISTO)
• Introducing a transfer balance cap of $1.6 million for pension phase accounts
• Reduction of Division 293 income threshold to $250,000
• Lowering the non-concessional (post-tax) contributions cap to $100,000 per annum
• Reduction of concessional (pre-tax) contributions cap to $25,000 per annum
• Carry-forward concessional contributions of unused caps over five years
• Improving the integrity of retirement income streams
• Removal of anti-detriment payment
• Innovative retirement income stream products
• Change in eligibility criteria for Co-contributions

Spouse tax offset

Currently an individual can claim a tax offset up to a maximum of $540 for contributions they make to their spouse's eligible super fund if, among other things, the total of the spouse's assessable income, total reportable fringe benefits and reportable employer super contributions is under $13,800.

From 1 July 2017, the spouse's income threshold will be increased to $40,000. The current 18% tax offset of up to $540 will remain as is and will be available for any individual, whether married or de facto, contributing to a recipient spouse whose income is up to $37,000. As is currently the case, the offset is gradually reduced for income above this level and completely phases out at income above $40,000.

The intent of this change is to extend the current spouse tax offset to assist more couples to support each other in saving for retirement. This will better target super tax concessions to low-income earners and people with interrupted work patterns.

Personal super contributions deduction

Currently, an individual (primarily self-employed) can claim a deduction for personal super contributions where they meet certain conditions. One of these conditions is that less than 10% of their income is from salary and wages.

The intent of this change is to improve the flexibility of the super system so that more Australians can utilise their concessional contributions cap.

Low income super tax offset contribution (LISTO)

The government will introduce a Low Income Superannuation Tax Offset (LISTO), which will replace the Low Income Superannuation Contribution (LISC) policy that has been repealed from 1 July 2017.

From 1 July 2017, eligible individuals with an adjusted taxable income up to $37,000 will receive a LISTO contribution to their super fund. The LISTO contribution will be equal to 15% of their total concessional (pre-tax) super contributions for an income year, capped at $500.

Introducing a transfer balance cap of $1.6 million for pension phase accounts

From 1 July 2017, the government will introduce a $1.6 million cap on the total amount that can be transferred into the tax-free retirement phase for account-based pensions.

• lifetime pensions paid under subregulation 1.06(2) of the Superannuation Industry (Supervision) Regulations 1994 (SISR) and annuities paid under subregulation 1.05(2) of the SISR
• current life expectancy pensions paid under subregulation 1.06(7) and annuities paid under subregulation 1.05(9) of the SISR
• current market-linked pensions paid under subregulation 1.06(8) and annuities paid under subregulation 1.05(10) of the SISR.

These pensions are commonly provided by defined benefit funds, but may be provided by other funds, including some self-managed super funds (SMSFs).

The general transfer balance cap will be indexed in $100,000 increments in line with CPI. Indexation will be applied proportionally where a member is a retirement phase income stream recipient, but has not at any time met or exceeded their cap.

Two draft Law companion guidelines are available:

Detailed information will be available within the next week.

Reduction of Division 293 income threshold to $250,000

Currently individuals with income and concessional super contributions in excess of $300,000 trigger a Division 293 assessment.

The intent of this change is to better target tax concessions to ensure the superannuation system is equitable and sustainable.

See also:
Lowering the non-concessional (post-tax) contributions cap to $100,000 per annum

From 1 July 2017, the government will reduce the annual non-concessional (after tax) contribution cap from $180,000 to $100,000 per year. This will remain available to individuals between 65 and 74 years old if they meet the work test. The cap will be indexed in line with the concessional contributions caps.

If you are under 65, you may be able to make non-concessional contributions of up to three times the annual non-concessional contributions cap in a single year. If eligible, when you make contributions greater than the annual cap, you automatically gain access to future year caps. This is known as the 'bring forward' arrangement.

For 2017-18 onwards to access the non-concessional bring forward arrangement:

• The individual must be under 65 years of age for one day during the triggering year (the first year).
• They must contribute more than the annual cap ($100,000 for the 2017-18 financial year).
• The difference between the general transfer balance cap ($1.6 million for the 2017-18 financial year) and their total superannuation balance must be greater than the general non-concessional contributions cap ($100,000 for the 2017-18 financial year) at the end of 30 June of the previous financial year. For the 2017-18 financial year this means that they must have a total superannuation balance less than $1.5 million to be able to access the bring forward arrangement.
• For 2017-18 onwards the remaining cap amount for years two or three of a bring forward arrangement is reduced to nil for a financial year if their total superannuation balance is greater than or equal to the general transfer balance cap at the end of 30 June of the previous financial year.

• If the difference between the general transfer balance cap and the individual's total superannuation balance is between one and two times the general non-concessional contributions cap for the first year the amount is twice the general non-concessional contributions cap over a two year period.
• If the difference between the general transfer balance cap and the individual's total superannuation balance is greater than two times the general non-concessional contributions cap for the first year the amount is three times the general non-concessional contributions cap over a three year period.

For the 2017-18 year the following table represents the bring forward arrangement for the first year.

2017-18 Bring forward period

See also:
Transitional period

If an individual has made a non-concessional contribution in the 2015-16 or 2016-17 financial years and that triggers the bring forward, but has not fully used their bring forward before 1 July 2017, transitional arrangements will apply so that the amount of bring forward available will reflect the reduced annual contribution caps.

See also:
Reduction of concessional (pre-tax) contributions cap to $25,000 per annum

Currently, individuals can make concessional (pre-tax) contributions up to $30,000 ($35,000 for people 50 years old and over) within a financial year.

From 1 July 2017, the government will lower the annual concessional contributions cap to $25,000 for all individuals. The cap will index in line with wages growth.

The intent of this change is to better target tax concessions to ensure the super system is equitable and sustainable.

See also:
Carry-forward concessional contributions of unused caps over five years

From 1 July 2018, individuals will be able to make 'carry-forward' concessional super contributions if they have a total superannuation balance of less than $500,000. They will be able to access their unused concessional contributions cap space on a rolling basis for five years. Amounts carried forward that have not been used after five years will expire.

The first year in which you can access unused concessional contributions is the 2019-20 financial year.

Transition to retirement income streams (TRIS) are currently available to assist individuals to gradually move to retirement by accessing a limited amount of super. Currently, where a member receives a TRIS, the fund receives tax free earnings on the super assets that support it.

Members will also no longer be able to treat super income stream payments as lump sums for taxation purposes.

The intent of this change is to ensure that TRIS are not accessed primarily for tax purposes but for the purpose of supporting individuals who remain in the workforce.

See also:
Removal of anti-detriment payment

Currently, the anti-detriment provision enables a fund to claim a deduction in their tax return for a top-up payment made as part of a death benefit payment where the beneficiary is the dependant of the person. The top-up amount represents a refund of a member's lifetime super contribution tax payments into an estate. From 1 July 2017, the Government is removing this provision and super funds will no longer be able to claim this deduction. This change will ensure consistent treatment of lump sum death benefits across all super funds.

Super funds may claim a deduction for an anti-detriment payment as part of a death benefit if a fund member dies on or before 30 June 2017. The fund has until 30 June 2019 to pay the benefit. Funds cannot include anti-detriment payments as part of a death benefit if the member dies on or after 1 July 2017.

See also:
Innovative retirement income stream products

Currently there are rules restricting the development of new retirement income products.

The intent of the change is to provide greater choice and flexibility for retirees to manage the risk that they outlive their retirement savings.

Currently to receive a Government Co-contribution you must ;

• have made one or more eligible personal super contributions to your super account during the financial year
• pass the two income tests (income threshold and 10% eligible income tests)
• be less than 71 years old at the end of the financial year
• not hold a temporary visa at any time during the financial year (unless you are a New Zealand citizen or it was a prescribed visa)
• lodge your tax return for the relevant financial year.

From 1 July 2017 you must also have a total superannuation balance less than the general transfer balance cap ($1.6 million for the 2017-18 financial year) at the end of 30 June of the previous financial year and must not have contributed more than your non-concessional contributions cap.

See also:
More information

1. Consult your financial adviser.
2. The ATO is working closely with Treasury to design and implement these changes. Information and fact sheets about these changes can also be found on Treasury's websiteExternal Link.

In our final Connection Point Newsletter for 2016, we provide insights on:

Refresh your financial goals:  As we approach year end, it's a good time to refresh financial goals and ensure our financial plans are on the right track.
The current market:  The third quarter proved to be a fairly strong one for most investments.
The window of opportunity looms: Superannuation reforms, the latest news.
Protecting the value of a homemaker:   When it comes protecting the family unit financially, most focus on the breadwinner but what about the homemaker's contribution?
Never too old to learn:  Many people who reach middle age will often discover a hunger for a new challenge in their career direction, but is it too late to take the plunge?

Click here for this Quarter's edition.

We advise that we will continue to operate over the Christmas/New Year period with the exception of the Public Holidays.

To all our valued clients we wish you and your family a very Merry Christmas and a safe and Happy New Year.

We look forward to catching up with you in 2017.

If you would like to discuss the changes please contact us.

Disclaimer
Information current as at 29 November 2016 - This information is of a general nature only and has been prepared without taking into account your particular financial needs, circumstances and objectives. While every effort has been made to ensure the accuracy of the information, it is not guaranteed. You should obtain professional advice before acting on the information contained in this publication. You should read the Product Disclosure Statement (PDS) before making a decision about a product