The Federal Budget delivered on 8 May 2012 contained a number of superannuation announcements that may impact NESS’ members.
Deferral of the $50,000 concessional contributions cap
This financial year, the concessional contributions cap is $25,000 or $50,000 if you are aged 50 or more, to allow older people to make catch-up contributions. This amount includes what your employer pays and what you may salary sacrifice. If you’re self-employed, this includes any personal deductible contributions. Any super contributions that exceed these annual caps are subject to a penalty tax of 31.5%.
The Government has announced that, from 1 July 2012, the concessional contributions cap will be $25,000 for all ages. Last year’s Budget measure to extend the $50,000 cap to individuals over 50 years of age with account balances of less than $500,000, has been deferred to 1 July 2014. Further, the Government anticipates that under current indexation arrangements, the general concessional contribution cap will rise to $30,000 in 2014-15, meaning the higher cap for those eligible people over 50 would be $55,000.
Increased contributions tax for higher income earners
Concessional contributions to superannuation (including employer contributions, salary sacrifice and personal deductible contributions for self-employed) currently attract a contributions tax of 15%, which is deducted from your super account.
The Government has announced that, from 1 July 2013, individuals with “incomes” greater than $300,000 will effectively pay a contributions tax of 30% through the reduction of tax concessions on their contributions. The definition of “income” for the purposes of this measure includes concessional super contributions, adjusted fringe benefits, total net investment loss, target foreign income and tax-free government pensions and benefits, less child support
Additional Government charges to boost funding to industry regulators
As part of the Government’s Stronger Super and SuperStream reform initiatives, which are designed to make the superannuation system more efficient, the Government has indicated that the costs of implementing these initiatives will be recovered through a temporary levy on APRA-regulated super funds from 2012-13. Industry and other employer super funds may have to pass on this additional cost to members.
Confirmation of the 12% Superannuation Guarantee and low income rebate
The Budget confirmed the gradual lifting of the Superannuation Guarantee rate to 12% by 2019-20. The Budget also confirmed the introduction of the low income super rebate, which will effectively remove the 15% contributions tax for those earning up to $37,000.
Please contact us for more information about these announcements.