Super Changes for 2013
On the 5th April 2013, the Federal Government announced their proposed changes to the superannuation system.
Increase in concessional contribution cap
- From 1 July 2013, proposed higher concessional contributions cap of (unindexed) $35,000 concessional cap for people aged over 60.
- From 1 July 2014, extending the higher concessional cap to those aged 50 and over.
- The general concessional cap of $25,000 for all other individuals is expected to reach $35,000 from 1 July 2018.
- There are no proposed changes to the non-concessional contributions cap.
Changes to excess contributions tax system
- The Government will allow all individuals to withdraw any excess contributions made from 1 July 2013 from their superannuation fund.
- Excess concessional contributions will be taxed at the individual’s marginal tax rate, plus an interest charge to recognise that the tax on excess contributions is collected later than normal income tax.
Threshold placed on tax exemption status for pension accounts
- From 1 July 2014, tax exemption on superannuation earnings supporting pensions and annuities will be capped at $100,000, and anything above that level taxed at a rate of 15 per cent.
No changes to tax free super benefits
- These changes will not affect the tax treatment of withdrawals. Withdrawals will continue to remain tax-free for those aged 60 and over, and face the existing tax rates for those aged under 60.
Changes to treatment of lost super accounts
- Last year, the federal government announced lost super accounts up to the value of $2000 would be transferred to the Australian Taxation Office. The balance threshold will be increased to $2500 from December 31, 2015 and $3000 at the end of 2016.
Changes to income stream accounts
- The Government will extend the normal deeming rules to superannuation account-based income streams for the purposes of the pension income test to ensure all financial investments are assessed fairly and under the same rules.
- Standard pension deeming arrangements will apply to new superannuation account-based income streams assessed under the pension income test rules after 1 January 2015.
- All products held by pensioners before 1 January 2015 will be grandfathered indefinitely and continue to be assessed under the existing rules for the life of the product so no current pensioner will be affected, unless they choose to change products.
What does this mean to you?
The changes will impact each of our clients differently. We encourage you to contact our office to discuss your personal circumstances on (03) 5331 3711.
DISCLAIMER: The material and contents provided in this publication are informative in nature only. It is not intended to be advice and you should not act specifically on the basis of this information alone. If expert assistance is required, professional advice should be obtained.
