So good news that the Federal Government didn’t make any major changes to super, especially Self-Managed Super (SMSF). The Federal Treasurer, Joe Hockey said that at a time of low interest rates and when superannuation fund members were looking for policy certainty, the Government would not be looking to change the settings.
However the Treasurer also said that superannuation savings were not intended to be a vehicle to boost family inheritances but, rather, were intended to produce income during retirement. (Money Management)
There are some key issues around super including –
1. No changes or new taxes to super / SMSFs but there are submissions being invited to a general tax review which includes super taxes. See Tax Discussion Paper and http://bettertax.gov.au/publications/discussion-paper/
2. No change to annual levy for SMSFs, only large APRA super funds
3. Accessing Super for Terminally Ill now means not having to wait until a person has only 12 months to live to be able to access super, but doubles to 24 months and verification by doctors of expected time to live, as well as access being tax-free.
4. The Government has proposed extending the deferral of the increase in the superannuation guarantee from the current 9.25% to 12% by a further year. This is to be achieved by pausing the rate at 9.5% between 2014–15 and 2018–19 and then increasing the rate incrementally by 0.5 percentage points each year to reach 12% in 2022–23. See more HERE
5. Excess Contributions Tax (ECT) – Included in the 2014–15 Budget is a measure to allow individuals the option to avoid ECT on non-concessional contributions by withdrawing superannuation contributions in excess of the cap made from 1 July 2013 and any associated earnings and have these taxed at their marginal rate. This implements a pre-election commitment to ‘develop an appropriate process that addresses all inadvertent breaches of the contribution caps where an individual can show that their mistake was genuine and the error would result in a disproportionate penalty’.
Non-concessional contributions are generally those made to a superannuation fund from after-tax income. An annual cap of $150,000 applies to non-concessional contributions, although a ‘bring forward’ arrangement also applies. This allows certain individuals to bring forward two years’ worth of entitlements to make three years’ non-concessional contributions in one year. As the earnings of a superannuation fund are concessionally taxed, this cap (in conjunction with a cap on concessional contributions) limits the amount of funds that can be shifted into superannuation each year. Under current arrangements, breaches of the cap excess are taxed at the Excess Contributions Tax (ECT) rate of at 46.5% (the rate increases to 47% from 2014–15). From Aust Parliament
For a lively overview and discussion of the 2015 Budget, see Trish Powell at Super Guide.
Interested to know what self-managed super (SMSF) is all about, and if it is for you? Book for a FREE webinar with bonuses NEXT month – Self Managed Super Fund Roadmap (all you need to know) for the next monthly event, see SMSF – FREE Seminar or call us 0407 361 596.