THE BIG STORY: Following the passage of the Minerals Resource Rent Tax in the Senate, various Superannuation Bills will also be introduced.
RBS Morgans private client adviser Andrea Morgan takes a closer look at three of the changes to be made.
This will affect you in some way, shape or form, so having knowledge about the changes will help you in making investment decisions, especially inside of your Superannuation.
Changes from 1 July 2012
1. Contribution Rebate for Low Income Workers
Effective 1 July 2012, a contribution rebate of up to $500 (not indexed) will be payable to workers with adjusted taxable income of less than $37,000.
The rebate will be calculated by applying a 15 per cent matching rate to the concessional contributions made by or for the individual.
The maximum rebate is $500 per individual. That is: $37,000 x 9 per cent = $3,330 x 15 per cent = $500.
The rebate will be paid in the following financial year (so from 2013/14 Financial Year) based on the previous year’s contributions, and paid into the individual’s super account.
It will not be necessary to lodge a tax return. The Australian Tax Office will use available data on hand to determine eligibility for the rebate.
To be eligible for the rebate, the individual must be working. Individuals who earn less than 10 per cent of their total income via employment or business income will not be eligible (this is the same test as per the Government Co-contribution payment).
2. Higher Concessional Contribution Cap for over 50s
The transitional contribution limit for individuals over age 50 is currently $50,000 per annum, compared with a $25,000 contribution limit for individuals under age 50.
This has been terrific for boosting funds inside of Super, especially beneficial for Self-Managed Super Funds.
The higher transitional limit for over 50s is unfortunately due to end 30 June 2012.
The Federal Government has proposed to continue the $50,000 concessional contribution limit post 1 July 2012 but only for those individuals over age 50 who have less than $500,000 in total within superannuation (accumulation and pension accounts).
Unfortunately at this point in time details of how the $500,000 threshold will be determined have not yet been released. I will keep you informed.
3. Superannuation Guarantee (SG) Contributions and Eligibility
Currently, employers are obliged to make contributions of 9 per cent of an employee’s salary to superannuation where the employee is under age 70.
In some instances, particularly for government employees, this rate can be higher.
Legislation has now passed to increase the SG rate from 9 per cent to 12 per cent, (in incremental stages 0.25 per cent for 2 years and 0.5 per cent every year after that), by 2020.
The eligibility age for employer SG contributions will be abolished from 1 July 2013.
In other words, SG contributions will extend to all workers regardless of age.
The intention of this change is to provide an incentive for older working Australians to remain in the workforce longer.
To find out more about how these changes may affect you, contact Andrea Morgan at RBS Morgans Perth on (08) 6462 1986 or email@example.com
RBS Morgans Limited ABN 49 010 669 726. AFSL 235410. A Participant of the ASX Group. A Professional Partner of the Financial Planning Association of Australia. Andrea Morgan Authorised Representative 404960. This advice is general in nature, does not take into account individual personal circumstances and the shares or figures stated are purely for example purposes. RBS Morgans Limited are not authorised to give tax advice Please speak with your accountant or tax agent advice on your personal tax planning strategies