The Henry Tax Review and your super

There has been much press about the release of the Henry Review in the media and you are probably wondering how it may affect you and your super.

From the key recommendations proposed in the Henry Review, the Government has proposed the following that relates specifically to superannuation.

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 shown here...
  

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

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. This will take affect from 1 July 2013.

Government contribution for low income earners (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 SG 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.

Extending the concessional contributions cap for people aged 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).

When will these changes take affect?

It is important to understand that these recommendations will not take affect until they are passed in 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 the Henry Review, the Cooper Review and any other changes that may affect you and your super.