In superannuation the plain truth of the matter is that the bulk of important news was released by the government some months ago. Indeed, any further changes or surprises in the superannuation sector would have sparked widespread consternation.
It should also be remembered the most important change of all in terms of the role of superannuation Australia commences in a little over 12 months when the first phase of the higher mandatory superannuation contributions kick in: From July 1, 2013 the Superannuation Guarantee Contribution (SGC) – the amount of pre-tax salary each year that must be put into superannuation begins its progressive rise from 9% to 12%. It moves to 9.25% in 2014 and then very rapidly to a new peak of 12% by 2019.
The budget also offers us confirmation of a range of substantial superannuation related measures previously flagged. They include:
- From July 1, 2014 future earnings on assets supporting income streams will be tax free only up to $100,000 a year for each individual. Earnings above the threshold will be taxed at the same concessional rate of 15% that applies to earnings in the accumulation phase.
- In a relief/backdown on higher superannuation contribution caps, the government will allow concessional tax contributions up to $35,000 starting July 1 2013 if you are over 60 and after July 1, 2014 if you are over 50.
- A reform of the draconian excess contributions tax, which had carried extreme penalty rates. After July 1, 2013 excess concessional contributions will be taxed at an individual’s marginal tax rate, plus an interest charge to recognise that the tax is collected late.
- The government will encourage the take up of deferred lifetime annuities by providing these products with the same concessional tax treatment that applies to investment earnings on superannuation assets.
- In relation to lost super the government will increase the threshold below which small inactive accounts and the accounts of ‘uncontactable’ members will be transferred to the ATO. The threshold goes from $2,000 currently to $2,500 on December 31, 2015 and then to $3,000 in December 2016.This is expected to reduce the amount of money in lost super accounts.
- The government will extend the standard pension deeming arrangements to new superannuation account-based income streams assessed under the pension income test from January 1 2015. This move is aimed at improving the fairness of the pension income tests.
Rumoured changes to items such as negative gearing, death duties or the capital gains tax treatment of the family home failed to come to pass.