Commonwealth Budget 2010/11

In terms of changes to Superannuation, the budget has mainly reaffirmed Government`s initial responses to the Henry Tax review with a few additions.

Extending the concessional contributions cap for people age 50+ (from 30 June 2012)

People aged 50+ with a total superannuation balance of less than $500,000 will have a separate higher concessional contributions cap of $50,000 (indexed)

Superannuation co-contributions

It has been announced that the superannuation co-contribution rate will be permanently set at 100% of contributions up to $1,000 in any financial year. This is a continuation of the rate at which co-contributions have been paid in 2009/10.

The income thresholds at which the co-contribution begins to reduce and eventually cuts out will be frozen at $31,920 and $61,920 for the next two financial years.

Low income earners Government superannuation contribution (from 2012-2013)

The Government will make a superannuation contribution of up to $500 annually for individuals on adjusted taxable incomes of up to $37,000 into the individual’s superannuation account.

The amount payable by the Government will be determined by applying a 15 per cent matching rate to the Superannuation Guarantee and other concessional superannuation contributions made by or for individuals on adjusted taxable incomes of up to $37,000. The annual maximum amount payable will be $500 on concessional contributions of $3,333. The $500 upper limit will not be indexed.

Gradually increasing the superannuation guarantee rate from 9% to 12%

Commencing in 2013, there will be a phased increase of the Superannuation Guarantee (SG) rate from 9% to 12%. The rate will be increased as follows:

Rate Increases 

Year	Rate %
2013 - 14	9.25%
2014 - 15	9.5%
2015 - 16	10%
2016 - 17	10.5%
2017 - 18	11%
2018 - 19	11.5%
2019 - 20	12%

Increasing the SG age limit from 70 to 75 (from 1 July 2013)

The age at which employees are no longer entitled to an employer SG contribution will be increased from 70 to 75. The new age limit will bring employer obligations in line with the age limit for voluntary and self-employed persons’ contributions.

Excess Contributions Tax

Allowing the ATO to exercise discretion in imposing excess contributions tax on superannuation contributions above the annual caps.

It is important to understand that these recommendations won’t take effect until they are passed by Parliament as legislation.

As always, we will endeavour to keep you in the loop on your super and advise you as soon as more information is available on changes that may affect you and your super.