08 Apr April Superannuation Changes
As you may be aware, federal treasurer Wayne Swan, and Minister for financial services and superannuation, Bill Shorten have recently announced several changes to the superannuation system.
Please note, that these changes are still subject to the ordinary political processes before they are set in law.
[fancy_header variation=”silver” textColor=”#222222″]Superannuation Income Streams[/fancy_header]
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- The first $100,000 of income earned within a pension will be tax-free, however annual earnings above $100,000 will be taxed at a concessional rate of 15% in the hands of the fund.
- A similar treatment of income will be applied for individuals in defined benefit schemes.
- Capital gains tax will now apply to assets in the pension phase if purchased after 1 July 2014. Special arrangements apply for capital gains earned on assets purchased before 1 July 2014, and after 5 April 2013. Contact us if you would like to learn more.
- The reforms will not impose any changes to taxation on withdrawals. That is, withdrawals made at or after reaching the age of 60 will remain tax-free, whilst under-60s will still pay their marginal tax rate less 15%.
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[fancy_header variation=”silver” textColor=”#222222″]Contributions Caps[/fancy_header]
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- Despite talks of introducing the $50,000 concessional cap linked to super balances under $500,000, the Government has decided to take a different approach. They have announced an unindexed $35,000 concessional cap, which will initially apply to all individuals aged 60 and over. From 1 July 2014 this will apply to individuals aged 50 and over.
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[fancy_header variation=”silver” textColor=”#222222″]Excess Contributions Tax[/fancy_header]
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- The changes to the excess contributions tax operations are quite positive. You will now be allowed to fully release the after-tax concessional contribution from your superannuation should you wish to avoid paying the penalty (that is, being taxed at the highest marginal tax rate on the excess amount). You can now opt to pay the tax bill personally, or using superannuation funds instead.
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[fancy_header variation=”silver” textColor=”#222222″]Centrelink Age Pension – Income Test[/fancy_header]
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- The Government has opted to extend the normal deeming rules to superannuation account-based income streams with relation to the Age Pension income test. This will apply to all income streams assessed after 1 January 2015. Existing pensioners should not be impacted by this change, unless they choose to change products after 1 January 2015. This is an important change, as it may have a significant impact on Age Pension entitlements. Please contact us if you wish to review your entitlements.
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About Reuben Zelwer
Reuben Zelwer established Adapt Wealth Management in 2011 to help time poor clients achieve financial freedom. For over 15 years, Reuben has helped professionals, executives, business owner and those approaching retirement make the most of their circumstances by making good financial decisions. Reuben’s professional practice is complemented by substantial voluntary work, which has included setting up financial literacy and savings programs in the local community. |