Changes to Superannuation Pre Budget 2013

Proposed changes for Pensioner and High Income Earners

Treasurer Wayne Swan and Minister for Financial Services and Superannuation Bill Shorten announced a number of proposed changes to the rules governing the operation of superannuation funds this morning.  The changes are expected to be brought in as part of the Budget in May and are in addition significant proposed change that was announced last year but has not yet reached the Parliament. 

Superannuation Funds Paying a Pension (Budget Announcement)

Currently if your superannuation fund is paying you a pension, the income earned by way of investment (dividend, interest & distributions) is concessional tax at a 0% tax rate.

The proposal is to change this to:

 If investment income exceeds $100,000 per annum per member, any amount that exceeds the $100,000 will be taxed at 15%.

So you think that this will not affect you because you don't earn more than $100,000 per year in you fund.

You might still get caught out!

Think of the whereby you decided to put your business property into your superannuation fund so you can rent it in your trading company.

The plan was you put the property in, when you retire you can sell the property and not pay any further tax as you get a concessional tax rate of 0%.

This is no longer the case, if you had the property in your SMSF for the last 10 years and it has grown modestly since then and you go to sell it with a $400,000 gain. You instantly jump over this $100,000 cap and start paying tax again. There are concessional transition arrangements for a 10 year period but your trustee will have to make sure they are not caught out.

This isn't just a tax on super wealth, this is going to be a tax on working Australian who have worked hard and saved their life.

High Income Earners, Greater than $300,000

This proposal has been previously announced. For around 12 months the Government is seeking to introduce a Bill that will impact people earning more than $300,000, whereby the contributions tax they pay on their contributions to super will rise from 15% to 30%.  

Some Good News, An Increase to Concessional Cap for over 60s

As part of the budget the government proposes that if you are over 60 and still eligible to contribute money to superannuation that the $25,000 concessional cap will be increased to $35,000 from the 1^st July 2013. This will be extended to those aged over 50 from the 1 July 2014.

This is all still down from the $50,000 cap for anyone over 50 that was active up until 30 June 2011.

What does this mean to you?

The Government introduced "Simple Super "several years ago, with these changes the definition of simple super is being stretch.

Now it is more important than ever to come in and talk to one of financial planner for more information please contact us today.

Call 02 4947 9900 to make an appointment.