Federal Budget 2014/15

Superannuation and SMSF changes in the 2014/15 Australian Federal Budget.

Progress on excess non-concessional contributions changes: SPAA

refund excess non-concessional contributions, associated earningsAccording to SPAA progress is being made in the consultation process for the changes to allow for the withdrawal of excess non-concessional contributions.

These changes were announced in the 2014 Federal Budget, and according to the Government statement would mean:

“If an individual chooses this option [withdrawing excess non-concessional contributions], no excess contributions tax will be payable and any related earnings will be taxed at the individual’s marginal tax rate.

Individuals who leave their excess contributions in the fund will continue to be taxed on these contributions at the top marginal rate.”

Though the change is meant to apply from 1 July 2013 the consultation process is still proceeding. According to SPAA the legislation is “being drafted”, and meetings are being held between Treasury and “representatives of the superannuation industry, including the SMSF Professionals’ Association of Australia”.

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White-label Client Newsletter: Budget 2014 – Superannuation

Following the release of the 2014 Budget this week we have decided to publish a White-label Client Newsletter for you to send to your SMSF clients. The newsletter covers the following changes: Slowing of Super Guarantee Increase Withdrawing Excess Non-Concessional Contributions Superannuation Pensions to count for Commonwealth Seniors Health Card You… Read More »White-label Client Newsletter: Budget 2014 – Superannuation

Budget 2014: Industry “disappointed” with super changes

SMSF & Superannuation NewsIndustry response to the 2014 Budget has been mixed, with support for changes allowing withdrawal of excess non-concessional contributions and providing certainty for the increase of the Superannuation Guarantee to 9.5% from 1 July 2014. However the response has been broadly negative to the slowing of the SG rate beyond that which was contained in the Minerals Resource Rent Tax Repeal and Other Measures Bill 2013.

Industry Super Australia says the changes in the budget will “result in a 25 percent reduction in total retirement incomes for someone aged 45 today on average earnings”, and instead proposes revisiting the recommendations of the Henry Tax Review.

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Budget 2014: Superannuation promise broken

The Abbott government promised that there would be no “adverse unexpected changes to superannuation during our first term”, and now that Joe Hockey has presented his first budget it seems this promise has been broken. While they didn’t all make the budget speech there are important changes to superannuation buried in the budget papers, the most wide-reaching of which is a slowing in the increase to the Superannuation Guarantee.

Superannuation Guarantee increase to slow

The current legislation has the Superannuation Guarantee increasing to 9.5% from 1 July 2014. The government had intended to delay this to 1 July 2016 under the Minerals Resource Rent Tax Repeal and Other Measures Bill 2013. However after this bill failed to pass the senate the government has decided to not change the currently scheduled increase in order to “give certainty to employers and employees”. However the increase in the SG rate will be further slowed – with the 9.5% rate to stay in place until 30 June 2018 and then increase at 0.5% per year until it reaches 12% in 2023/24. This is an even slower increase than that proposed in the Repeal bill, as shown in the following graph:

Slower increase in Superannuation Guarantee from 9% to 12%

 Source: Budget Measures Budget Paper No. 2 2014-15, ATO Website and APH website.

Read More »Budget 2014: Superannuation promise broken