There were a couple of measures which will reduce the ability to contribute to super in a cost effective manner, however the 15% tax rate on investment income and 10% capital gains tax was maintained; the exemption for funds paying pensions (and for 60 year old+ superannuants) was not touched.
As always, there are to be some changes. The 2 main ones are:
Deferral of $50,000 For People With Less Than $500,000 in Super Contributions
We already knew from 1 July 2012, the Government was going to reduce concessional contributions to $25,000 p/a for many people. The exception was to be those who were both over 50 years of age and had less than $500,000 in total superannuation balances.
The Government has now decided to defer this by a further 2 years. So for the next 2 years, everyone will be limited to $25,000 p/a. For the 2014/15 financial year, the original plan (i.e. $50,000/+50yrs/<$500,000) will recommence.
Probable Increase in Concessional Contribution Caps From 2014/15
The Budget papers say that “In 2014-15, the general cap is likely to increase to $30,000 through indexation, and the higher cap would then commence at $55,000.”
“Likely”? Normally Budgets are documents which commit to the addition, removal, increase or decrease in things as a matter of fact. It is unusual that the word “likely” is used in the budget delivery making us a little unsure how to interpret this new “maybe” style of commitment. A word-search of the papers can find no other measure which is similarly described.
And Now For the Bad News…
For people with income over $300k p/a the 15% contributions tax will no longer apply as of 1 July 2012. Instead, the rate will go to 30%
Considering that people in that category are going to be limited to $25,000 p.a. of concessional contributions in any event, someone making the maximum deduction contribution would be looking at an extra $3,750 of tax. It is unlikely that the extra impost will stop them from contributing.
For accountants and administrators, the main point of concern is about how they intend to administer and collect this extra amount. Anyone who survived the Howard Government’s introduction of the superannuation surcharge will remember what a debacle the reporting and assessment process was.
Given that they are intending to bring it into effect from 1 July 2012, we won’t be left wondering for long!
And That’s a Wrap!
There were a couple of re-announcements of existing measures including the increase in the super guarantee and the upcoming requirement for SMSF auditors to obtain registration. However, there was nothing else new to add.