It is important to remember that the new laws proposed by the 2013 Budget have not yet come into effect.
However, I expect that some of the rules around superannuation will be pasted in the next 6 weeks of sitting before the government raises and heads to a election.
The below changes should not be acted on until it is law but at the same time we need to be aware and consider the effects on any decisions made now.
- Introduce a 15% tax on earnings in excess of $100,000 on superannuation retirement accounts. Once in pension phase if the income of your pension is above $100,000 any excess will be taxed at 15% this included any taxable capital gain.
- Reconfirm the commitment to apply a 15% tax on concessional contributions for individuals who earn over $300,000. As at the 01/07/2012 if you earn over $300,000 in assessable income then and concessional (taxable) contribution made to your superannuation fund is subject to a 30% tax rate as opposed to the current 15% tax rate.
- Simplify the design and administration of the higher concessional contributions cap. As at the 01/07/2013 the concessional cap for people 59 years of age or over will have their concessional cap lifted to $35,000 pa. From the 01/07/2014 people who are 49 years or over will have their concessional cap lifted to $35,000. It is expected that the general concessional cap will reach $35,000 due to indexation by July 2018.
- Change the treatment of concessional contributions in excess of the annual cap. This will allow for any excess concessional contributions to be refund to the member or left in the fund as a non-concessional contribution. However, the member will need to include this amount into their personal taxable and pay tax on the amount at their marginal rate.
- Extend the normal deeming rules to superannuation account-based income streams. At present account based pension income is treated differently under the centrelink deeming rules due to their non-assessable portion. As at the 01/01/2015 all new account based pension income will be subject to the same deeming rules as income from investments outside of super. Any account based pensions started before 01/01/2015 will be grandfathered.
- Deferred lifetime annuities (DLAs) will be eligible for the same concessional tax treatment that superannuation assets supporting superannuation income streams receive from 1 July 2014. This reform will provide retirees with more choice by allowing them to allocate part of their superannuation to a product that will provide an ongoing income stream for life beyond a certain age. Extend concessional tax treatment to deferred lifetime annuities
- The Government will increase the account balance threshold below which small inactive accounts and the accounts of un-contactable members are required to be transferred to the Australian Tax Office (ATO). The threshold will be increased from $2,000 to $2,500 from 31 December 2015, and then to $3,000 from 31 December 2016.
Super is an easy target for government and has been attacked as a source of revenue. Remember that this is your money no different to money in the bank.
So a few things you should do now:
- Make sure all your super is in one place to stop the government grabbing it.
- If over age 55 start an account based pension prior to the 01/01/2015.
- Make sure you are aware of the capital gains tax rules especially if you intend to purchase residential property in your super fund.
If you would like more information please give us a call on (07) 4771 4577.