Legislative updates and Optimo Pathfinder

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Legislation we are keeping an eye on

The Optimo Pathfinder model only includes legislation that has been passed in both houses of parliament and received Royal Assent from the Governor General. However, we are constantly monitoring proposed changes so that if they become law, Pathfinder is updated quickly.

Proposed change

Status*

Implemented in Pathfinder online

More details

How to check if your case may be affected by this change

Medicare Levy Amendment Bill 2017 (and associated bills)

Bill before parliament  

No These bills increase the Medicare levy from 2% to 2.5% of a person’s taxable income to pay for NDIS funding.

You can check if an individual is paying the medicate levy in the detailed reports:

  • In Pathfinder, go to: Results (top menu) > Detailed reports (you need to have solved, first)
  • On the left menu, choose the individuals name, then choose the Tax report
  • In the report is a line called 'Medicare levy' (this is currently assumed to be 2%, as that is the current legislation.

If you would like to calculate what the medicare levey would be under the proposed 2.% level:

  • In the same Tax report as specified above, find the 'Total taxable income' line
  • Multiply this line by 2.5%

First Home Super Saver Tax Bill 2017

Passed  

Not yet.

This bill covers:

  1. The First Home Super Saver Scheme; and
  2. Contributing the proceeds of downsizing to superannuation

If passed, this bill may give to some people alternative strategies that aren't currently available in Pathfinder:

  1. Buying a first home - With the proposed First home saver super scheme, first home buyers can salary sacrifice into super up to $15k per year capped at $30k total to fund their home deposit. The deposits are taxed at 15% on the way in and marginal rate less 30% on the way out. Non-concessional contributions can also be made; they will not benefit from a tax concession, but earnings on these contributions will benefit from the concessional rate of tax in superannuation and will not be taxed when withdrawn.
  2. Selling a family home when over 65 - If a family home is sold, if the individual is over 65, up to $300k per person can be put into super non-concessionally above the normal limits.

If you would like to model either of these options, please contact Optimo Financial and we may be able to model it as part of our strategy development service.

*Explanation of Statuses:

  • Draft legislation - A draft of the legislation has been released by the relevant minister for comment and possible modification. It has not as yet been tabled in Parliament.  This will never be included in Pathfinder, although, if possible, we may explain how you can do a workaround.
  • Bill before Parliament - The Bill has been tabled in Parliament and is being considered by the House of Representatives and/or Senate.  This will never be included in Pathfinder, although, if possible, we may explain how you can do a workaround.
  • Passed – This has been passed and is now law.  This means that it is, or soon will be, in Pathfinder.
  • No longer proposed – This proposal has been scrapped. It is not in Pathfinder.


Legislation Recently Implemented in Pathfinder

If you did your case analysis before a change was implemented, you can re-run your case with the changes includes by clicking the Start solve button at the Solve sub-step (under the Results step )

Change Date implemented in Pathfinder Online

Details

(for more information about reading results, see How to read the websolve results)

Technical and Legislative updates

 

  • For 2017/18, the lower threshold for the government superannaution co-contribution has been increased from $36,021 to $36,813 (and then indexed by AWOTE from 2018/19)
  • The concessional superannuation contribution cap now increases in increments of $2,500 (changed from $5,000)
  • The maximum super contribution base for 2017/18 is now $52,760 (and then indexed by AWOTE  from 2018/19)
  • Marginal tax thresholds will now be indexed by CPI from 2027/28 onwards (previously they were less conservatively indexed from 2026/27)
Social Services Legislation Amendment Bill 2017

 

The Family Tax Benefit Parts A and B are now frozen at the 2016/17 level for 2017/18 and 2018/19. If you ran you case before this change was implemented, then the Family Tax Benefit estimated by Pathfinder may be higher than the estimate with this chance.

Default Pathfinder start date for analysis is now 1 July 2017

 

Any case created before 1 April 2017 will have 1 July 2016, as the start date for analysis.

Any case created on or after 1 April 2017 will have 1 July 2017, as the start date of analysis.

Please Contact Optimo Financial, if you would like to change the start date of your case from the default.

Allowing 'catch-up concessional superannuation contributions' by allowing unused concessional contribution caps to be carried forward on a rolling basis for up to five years for those with account balances of $500,000 or less.

 

If you allow voluntary super concessional contributions in a case, Pathfinder may use catch-up contributions if the individual is eligible and it is beneficial in the context of the scenario and assumptions.

In the scenario results, the following reports have more information:

  • Action items - check the year the catch-up contribution is made
  • Detailed reports > (Individual name) > Cash flows > Super deposits summary - In this report, you can see the available unused cap for an individual in the 'Available unused cap' line (in the 'Concessional deposits limits' section)
From 1 July 2017, $1.6m cap on rollovers to the pension.

 

Pathfinder calculates rollovers to the pension and it will never exceed the cap.

In the scenario results, you can see the transfer balance details in the pension fund cash account report in the detailed reports:

(Individual name) > (Super fund name) > (Super fund name) pension > Cash account

At the end of the report, there are lines for the transfer balance cap.

From 1 July 2017, restrict non-concessional contributions to individuals with a total superannuation balance below $1.6m.

 

Pathfinder will never make non-concessional super contributions when the total superannuation balance is $1.6m or over.

You can see the total super balance used in this restriction in the 'Super deposits summary' report, which is in the detailed reports:

  • (Individual name) > Cash flows > Super deposits summary
    On this report, you will see the 'Superannuation balance' which is the projected, total superannuation balance for the start of the year.

From 1 July 2017, reduce cap on annual non-concessional super contributions to $100k. New cap on 3-year bring forward rule is reduced to $300,000 if super balance is less than $1.4m. If super balance is between $1.4m and $1.5m , the bring-forward rule is only allowed for 2 years (i.e. $200k). If super balance is at or over $1.5m, the bring-forward rule is not allowed to be used.

 

If you allow non-concessional super contributions in a case, Pathfinder may make non-concessional super contributions and use the bring forward rule, however, it will never go over the caps.

In the scenario results, the following reports have more information:

  • Non-concessional contributions, including whether the bring forward rule is used, are mentioned in the action items.
  • For more information, you can see the 'Super deposits summary' report in the detailed reports:
    (Individual name) > Cash flows > Super deposits summary

From 1 July 2017, improve access to concessional contributions by removing the restriction that prevents persons receiving more than 10% of their income in salary and wages from claiming a tax concession.

 

To check if voluntary concessional contributions are made:

  • Check the action items
  • For more information, you can see the 'Super deposits summary' report in the detailed reports:(Individual name) > Cash flows > Super deposits summary
From 1 July 2017, lower concessional cap of $25,000 from 2017/18 onwards.

 

Pathfinder will never make concessional contributions over the cap:

  • In the action items, if voluntary super contributions are made, the cap will also be listed.
  • For more information, you can see the 'Super deposits summary' report, which is in the detailed reports:(Individual name) > Cash flows > Super deposits summary
From 1 July 2017, a Low Income Superannuation Tax Offset (LISTO) to replace the LISC when it ends on 30 June 2017.

 

Pathfinder will automatically calculate whether an individual is eligible for the Low Income Superannuation Tax Offset (LISTO). If an individual receives the LISTO, it will be listed:

  • In the action items for the year
  • In the detailed 'Super deposits summary' report. Which is in the detailed reports:(Individual name) > Cash flows > Super deposits summary
From 1 July 2017, removing tax exempt status from assets supporting transition to retirement income streams.

  

You can allow Pathfinder to optimise TTR pensions.

In the scenario results, the following reports have more information:

  • The action items
  • Cash flows report
From 1 July 2017, requiring those with combined incomes and superannuation contributions greater than $250,000 to pay 30 per cent tax on their concessional contributions, up from 15 per cent.

Not implemented.

  • Not implemented in the websolve.
  • Available in the SDS service only.

If you solved your case before the implementation date, then you should solve the case again to get results with the changes in place.

Change Date Implemented in Pathfinder
A Low Income Superannuation Tax Offset to replace the LISC when it ends on 30 June 2017.

 

Extending the spouse tax offset to recipients with income up to $37,000 (currently $10,800).

 

$100k cap on annual non-concessional super contributions. New cap on 3-year bring forward rule is $300,000.

 

Increasing the third personal income tax threshold from $80,000 to $87,000 for 2016/17 onwards.

If adjusted income is above 80,000 then FTB-A supplement is considered 0.

For more details on what's been implemented in Pathfinder, see our release notes.