No new superannuation measures announced
Although no new measures were announced as part of the Budget, the following is a summary of changes that have been announced recently.
Reduction of Tax Concessions for very High Income Earners
For contributions from 1 July 2012, individuals with incomes greater than $300,000 will have a doubling of contributions tax, from 15% to 30%, thereby reducing the tax concession on the contributions.
“Income” will include taxable income, concessional (deductible) superannuation contributions, adjusted fringe benefits, total net investment losses, target foreign income, and tax-free government pensions and benefits. Where a person’s income excluding concessional contributions is below the threshold only that part of their contributions that is over the threshold will be subject to the higher tax.
Higher Concessional Contributions Caps
People aged 50 and over will be able to make concessional (i.e. tax deductible) contributions, or have such contributions made on their behalf by their employers, of $35,000 from 1 July 2014 (up from the current $25,000 limit).
The higher limit will apply from 1 July 2013 for people aged 60 and over.
Reforming the tax exemption for earnings supporting retirement income streams
From 1 July 2014 earnings on superannuation assets supporting income streams will only be tax-free up to $100,000 per annum for each individual. Earnings above that limit will be subject to tax at 15%, being the same rate that applies to earnings in the accumulation phase. The limit will be indexed to Consumer Price Index (CPI) and will increase in $10,000 increments.
There will be special treatment for capital gains on assets acquired before 1 July 2014. This new measure will only apply to capital gains that accrue:
- After 1 July 2024 – for assets acquired before 5 April 2013
- After 1 July 2014 – for assets acquired between 5 April 2013 and 30 June 2014
As superannuation funds receive a 33% discount on capital gains made on assets held for at least 12 months the Capital Gains Tax (CGT) will effectively be at a rate of 10% when the $100,000 income limit is exceeded.