The Federal Government has announced a number of superannuation changes as part of its Mid-Year Economic and Fiscal Outlook:
Here are three:
Concessional Contribution Cap
The standard concessional contributions cap of $25,000 is generally indexed to average weekly ordinary time earnings (AWOTE) and is increased in increments of $5,000. There will be no increase for the year 2013/2014.
This is not the first time that the caps have not been increased as scheduled and is a worrying trend particularly considering the intended removal of the $50,000 cap for the over 50s from 1 July 2012.
Low Income Superannuation Contribution (LISC)
From 1 July 2012, the 15% contributions tax for employees earning up to $37,000 pa will be refunded into their superannuation accounts if the payment is more than $20 and the employee receives at least 10% of their income from employment or a business.
Taxpayers in this bracket pay personal tax at the rate of 15% so do not gain any benefit in making tax deductible contributions to superannuation given that these are also taxed at 15%. This is welcome and removes the disincentive that these members have to contribute to superannuation.
The age limit of 70 for superannuation guarantee contributions will be abolished from 1 July 2013.