Superannuation changes
The federal government announced a number of superannuation changes, amending some provisions that have created “unintended consequences” for many, and tightening controls over self-managed superannuation funds (SMSFs).
Refund of excess concessional contributions
From 1 July 2011, individuals who have made excess concessional contributions of up to $10,000 (not indexed) to their superannuation fund can choose to have these contributions refunded to them and assessed at their marginal rate of tax, rather than incurring excess contributions tax. This option will only be available in the first year of breach.
Changes to minimum pensions
Over the last three income years, in response to the impact of the Global Financial Crisis, the government allowed superannuation fund pensioners the option to draw minimum pensions at a rate of 50% of the normal rate specified by the regulations. This will phase out over the next two years and will return to normal in the 2012-2013 year. The change will apply to account-based, allocated and market-linked or term-allocated pensions.
The minimum pension drawdown rate will be as follows:
|
Age |
Minimum per cent applicable 2011 FY |
Minimum per cent applicable 2012 FY |
Minimum per cent applicable 2013 FY |
|
Under 65 |
2.00% |
3.00% |
4% |
|
65-74 |
2.50% |
3.75% |
5% |
|
75-79 |
3.00% |
4.50% |
6% |
|
80-84 |
3.50% |
5.25% |
7% |
|
85-89 |
4.50% |
6.75% |
9% |
|
90-94 |
5.50% |
8.25% |
11% |
|
95 or more |
7.00% |
10.50% |
14% |
Contribution caps for over 50s
Individuals aged over 50 and who have a superannuation fund balance of less than $500,000 can now continue to make contributions of $50,000 .The change is that this amount is not indexed to inflation.
Co-contribution freeze extended
The indexation applied to the minimum and maximum income levels for the superannuation co-contribution will be frozen until 2012–2013.
Supervisory levy to increase
The supervisory levy applicable to SMSFs will increase to $180 from the 2012 financial year onwards. From 1 July 2012, SMSF auditors will need to pay a registration fee. The money raised by these measures will be used by the Australian Taxation Office to implement stronger compliance of the Self Managed Superannuation sector
Superannuation payments to be reported on payslips
From 1 July 2012, employers will be required to include the amount of superannuation contributions actually paid to employees’ superannuation accounts on payslips. Super funds must also notify employees and employers on a quarterly basis if regular payments cease.
This change sounds simple but will add additional compliance burden for small businesses with one or two employees. Its aim is to reduce the risk of Excess contributions or conversely a total lack of superannuation contributions. As yet, we do not know what penalty arrangements will be used to “encourage” compliance with this change.
Sources:
MLC Technical Update 10 May 2011
Challenger 2011-2012 Federal Budget Report