• Confirmation of extension to contribution caps
for over-50s
• Some relief from tax on excess concessional
contributions
• Greater use of Tax file numbers
For members, the co-contribution will remain the
same for the 2011/12 year at a maximum of $1,000 with the income
thresholds also remain unchanged. The rules surrounding excess
contributions are welcomed, with those breaching their cap as a
first offence now able to withdraw excess contributions of up to
$10,000. This could help members from being slugged with the excess
contributions tax of 46.5% going forward.
From an employer's point of view there is one
important change to note. From July 2012, employers will need to
record superannuation contributions actually paid on their
employees' payslips. This will alert employees to any delay
in payment. Superannuation funds will be required to advise
employers and employees of any change in regular payments.
More detailed information is provided on these
changes below:
Securing super
The Government will ensure that employees receive
information on their payslips about the amount of superannuation
actually paid into their account; and employees and employers will
receive quarterly notification from their superannuation fund if
regular payments cease, with effect from 1 July 2012.
This measure will help members to keep track of
their employer's contributions, and take action where there is a
shortfall. Additionally, the Government proposes that
directors of companies be personally liable should their company
fail to pay superannuation guarantee contributions.
Co-contribution thresholds
Under the co-contribution scheme the government
matches contributions made by eligible members to their
superannuation accounts out of after tax income. The matching
contribution is up to $1,000 per annum for members with an income
up to the lower threshold of $31,920pa. The matching contribution
then reduces for incomes over the lower threshold and up to the
upper threshold of $61,920pa. The budget confirms these thresholds
will be frozen at current levels until 30th June 2013.
Higher concessional contributions cap for over
50s
A higher concessional contributions cap of $50,000
will be applied from 1st July 2012 for members who have attained
age 50 and whose superannuation balance is less than
$500,000.
Contributions which exceed the contribution
thresholds
A new measure of relief for members who breach the
2011/12 concessional contribution cap limit of $25,000 has been
introduced. Members will have an opportunity to withdraw excess
contributions of up to $10,000 but only in the first year in which
a breach occurs after the 1st of July 2011. These excess
contributions can then be assessed as income at the member's
(potentially lower) marginal rate of tax instead of incurring the
excess contributions tax of 46.5%. There is still potential
confusion over the calculation of concessional contributions for
certain defined benefit members and it is hoped this will be
addressed by the Government in the near future. This relief
does not apply to excess contributions in earlier years.
Concessional contributions include compulsory
superannuation guarantee payments, salary sacrifice contributions,
and other deductible contributions.
Use of Tax File Numbers (TFN)
As previously announced, the Government will allow
superannuation fund trustees to make greater use of tax file
numbers to locate member accounts and to facilitate consolidation
of multiple member accounts. This will help improve
administration by removing the existing requirement for fund
trustees and Retirement Savings Account providers to use other
methods of identification to locate accounts before TFNs can be
used, with effect from 1 July 2011. It will also assist fund
trustees and RSA providers to carry out more efficient
consolidation of multiple member accounts, with effect from 1
January 2012, if not proclaimed earlier.
If you have any queries in regards to any of this
information call us on 132 467.
* Source: Federal Budget Measures/Budget Paper No
2. Federal Budget 2011-12 (10 May 2011) www.treasury.gov.au
BUDGET UPDATE
The Budget provided little news on superannuation. The key
impacts for superannuation include measures on:
- Securing super
- Freezing of co-contribution thresholds and maximum payment
- Confirmation of extension to contribution caps for
over-50s
- Some relief from tax on excess concessional contributions
- Greater use of Tax file numbers
For members, the co-contribution will remain the same for the
2011/12 year at a maximum of $1,000 with the income thresholds also
remain unchanged. The rules surrounding excess contributions are
welcomed, with those breaching their cap as a first offence now
able to withdraw excess contributions of up to $10,000. This could
help members from being slugged with the excess contributions tax
of 46.5% going forward.
From an employer's point of view there is one important change
to note. From July 2012, employers will need to record
superannuation contributions actually paid on their employees'
payslips. This will alert employees to any delay in payment.
Superannuation funds will be required to advise employers and
employees of any change in regular payments.
More detailed information is provided on these changes
below:
Securing super
The Government will ensure that employees receive information on
their payslips about the amount of superannuation actually paid
into their account; and employees and employers will receive
quarterly notification from their superannuation fund if regular
payments cease, with effect from 1 July 2012.
This measure will help members to keep track of their employer's
contributions, and take action where there is a shortfall.
Additionally, the Government proposes that directors of
companies be personally liable should their company fail to pay
superannuation guarantee contributions.
Co-contribution thresholds
Under the co-contribution scheme the government matches
contributions made by eligible members to their superannuation
accounts out of after tax income. The matching contribution is up
to $1,000 per annum for members with an income up to the lower
threshold of $31,920pa. The matching contribution then reduces for
incomes over the lower threshold and up to the upper threshold of
$61,920pa. The budget confirms these thresholds will be frozen at
current levels until 30th June 2013.
Higher concessional contributions cap for over 50s
A higher concessional contributions cap of $50,000 will be
applied from 1st July 2012 for members who have attained age 50 and
whose superannuation balance is less than $500,000.
Contributions which exceed the contribution thresholds
A new measure of relief for members who breach the 2011/12
concessional contribution cap limit of $25,000 has been introduced.
Members will have an opportunity to withdraw excess contributions
of up to $10,000 but only in the first year in which a breach
occurs after the 1st of July 2011. These excess contributions can
then be assessed as income at the member's (potentially lower)
marginal rate of tax instead of incurring the excess contributions
tax of 46.5%. There is still potential confusion over the
calculation of concessional contributions for certain defined
benefit members and it is hoped this will be addressed by the
Government in the near future. This relief does not apply to
excess contributions in earlier years.
Concessional contributions include compulsory superannuation
guarantee payments, salary sacrifice contributions, and other
deductible contributions.
Use of Tax File Numbers (TFN)
As previously announced, the Government will allow
superannuation fund trustees to make greater use of tax file
numbers to locate member accounts and to facilitate consolidation
of multiple member accounts. This will help improve
administration by removing the existing requirement for fund
trustees and Retirement Savings Account providers to use other
methods of identification to locate accounts before TFNs can be
used, with effect from 1 July 2011. It will also assist fund
trustees and RSA providers to carry out more efficient
consolidation of multiple member accounts, with effect from 1
January 2012, if not proclaimed earlier.
If you have any queries in regards to any of this information
call us on 132 467.
* Source: Federal Budget Measures/Budget Paper No
2. Federal Budget 2011-12 (10 May 2011) www.treasury.gov.au