I will not be commenting on all aspects of the budget, my comments will be limited to issues which affect your investments and/or superannuation.
- Superannuation Concessional Contributions – if you are over the age of 50 then your concessional contributions amounts have been reduced from $50,000 pa to $25,000pa. Concessional contributions are those made by an employer and made by salary sacrifice. As such if you are over age 50 and currently salary sacrificing into super you need to review this ASAP. Excess contributions are taxed at the highest marginal rate plus penalties.
- ASIC Fees – the fees which financial planners pay to the ASIC have been increased. Anyone who is in business knows that when a fee is increased to the provider of a service such as financial planning then the clients will either pay more or receive less service. You can expect to be paying more for financial advice in the future.
- Reduction of concessional tax – contributions to superannuation are tax at 15%, this has now been increased to 30% for individuals who earn over $300,000. This is a major disincentive for high income earners to contribute into superannuation. An interesting note is that politicians who earn over $300,000 such as Penny Wong do not pay this due to the way the government super is set up. Lucky them.
- Self Managed Super Funds (SMSF) Audits – the ASIC will be increasing their crack down on SMSF by increasing the regulation around the auditors of SMSF. This will increase the cost of having your fund audited each year.
- Eligible Termination Payments (ETPs) – these will now be taxed differently and the ETP tax offset will be wound back. The offset will apply to an income of $180,000 including the ETP, everything over this will be taxed at the top marginal rate.
There are also a number of changes in regard to your personal and business tax return but I will leave these for your accountant to explain to you.
As you can see from the above changes if you are in your fifties and looking to save for retirement this budget has not done you any favours. It has limited the amount you can get into super tax effectively and looked to increase your costs.
For more information please contact us on 07 4771 4577.