FUTURE CHANGES TO SUPERANNUATION

 

Government Announcement Regarding
Intended Changes to Superannuation
(Henry Tax Review)
 
On Sunday 2 May 2010 the Federal Government announced its intention to amend laws affecting superannuation. These intended changes need to be approved by Parliament before they become law.
1.       Increasing the Superannuation Guarantee to 12%
 
The Superannuation Guarantee will be increased gradually to 12% over the following period:

Financial Year
Superannuation Guarantee %
2010/2011
9%
2011/2012
9%
2012/2013
9%
2013/2014
9.25%
2014/2015
9.5%
2015/2016
10%
2016/2017
10.5%
2017/2018
11%
2018/2019
11.5%
2019/2020
12%

 
Source: Fact Sheet “Superannuation - Increasing the Superannuation Guarantee to 12%” appearing on the “Stronger, Fairer, Simpler” website at www.futuretax.gov.au
 
2.       Low Income Earners Government Contribution
 
Commencing in the 2012/2013 financial year the Government will refund the 15% contributions tax paid on concessional contributions, to a maximum of $500, for individuals with an adjusted taxable income of $37,000. This is expected to be paid into your superannuation account in the 2013/2014 financial year.
 
Source: Developed from Fact Sheet “Low Income earners Government Contribution appearing on the “Stronger, Fairer, Simpler” website at www.futuretax.gov.au
 
Benefit example (developed from an interpretation of the above announcement)
An individual earning $30,000 per year receives a 9% Superannuation Guarantee contribution of $2,700. When this is received in a superannuation fund the fund deducts 15% contribution tax, or $405 on behalf of the Government. It is expected that this $405 will be refunded into the member’s account.
 
3.       Increasing Concessional Contribution Caps
 
The current $50,000 concessional contributions cap for individuals aged 50 or over is a transitional cap scheduled to expire from 1 July 2012. From 30 June 2012 the cap will be extended permanently for individuals aged 50 years or over who have total superannuation balances of less than $500,000.
 

Financial Year
Concessional Caps
 
Individuals aged under 50 years
Individuals aged 50 years or more
2010/2011
$25,000
$50,000
2011/2012
$25,000
$50,000
 
 
Aged 50 years or more with superannuation balances less than $500,000
Aged 50 years or more with superannuation balances  $500,000 or more
 From 2012/2013
$25,000
$50,000*
$25,000

 * Indexed
 
Source: Developed from Fact Sheet “Superannuation – Concessional Contribution Caps” appearing on the “Stronger, Fairer, Simpler” website at www.futuretax.gov.au
 
4.       Raising the Superannuation Guarantee Age Limit from 70 to 75 years
 
Currently the Superannuation Guarantee only applies to people aged up to 70 years. From 1 July 2013 workers aged 70 to 74 years will be eligible to have Superannuation Contributions made on their behalf for the first time.
 
Source: Fact Sheet “Superannuation – Raising the Superannuation Guarantee Age Limit from 70 to 75” appearing on the “Stronger, Fairer, Simpler” website at www.futuretax.gov.au