Superannuation Changes
From our February 2012 issue
A number of changes in relation to the taxation of superannuation have recently been announced:
• Individuals earning up to $37,000 will effectively pay no tax on their superannuation guarantee contributions from 1 July 2012. Under the low income superannuation contribution, the 15% contributions tax will effectively be refunded into the superannuation account of the relevant taxpayer in 2013-14.
• Reporting obligations will also be simplified and streamlined so that individuals who do not otherwise need to lodge an income tax return will not need to do so in order to claim the benefit of these reforms. Instead, the ATO will verify an individual’s income using available data to identify those taxpayers who qualify for assistance to boost their superannuation savings. These reforms will be especially helpful as approximately a million additional low-income earners will no longer have any income tax reporting obligations once the
tax-free threshold increases from $6,000 to $18,200 as of 1 July 2012.
• The government will pause the indexation of the superannuation general concessional contributions cap for one year in 2013-14, so it remains at $25,000. Indexation of the cap will be deferred until 2014-15, when the cap is expected to rise to $30,000. The pause in indexation of the general concessional contributions cap will also result in a pause in the indexation of the concessional contributions cap for individuals aged 50 and over and the non-concessional contributions cap.
• From 1 July 2012, the government will reduce the super co-contribution (whereby the government matches the individual’s contribution dollar for dollar) by 50% to 50c per $1 contribution. This reduces the maximum benefit from $1,000 to $500. The measure also means that those earning more than $46,920 will no longer get a partial benefit compared with the current upper income threshold of $61,920.
These changes are unlikely to require a revision of your business practices in relation to superannuation contributions for your employees. However, it is important to be aware of these changes when making decisions in relation to your contributions in 2012. It is also important to bear these changes in mind when negotiating employment contracts with your employees.
To do!
The laws governing the taxation of superannuation are set to change. Seek advice from your tax adviser so that you can find out how these changes affect you.
This information is for guidance only and is not intended as specific advice to any reader. Professional advice should be obtained before acting on any information contained herein. The publisher accepts no responsibility for loss occasioned to any person or organisation as a result of action or the refrain of action as a consequence of the contents of this publication.