refund of excess concessional contributions

Date of effect: 1 July 2011

Changes were outlined to reduce the impact of excess contributions tax on people who exceed their concessional cap for the first time.

Those meeting certain conditions can opt to have their excess concessional contributions taken out of their super fund and assessed as income at their marginal tax rate, rather than incurring the 46.5% excess contributions tax.

This measure will apply to excess concessional contributions up to $10,000 (unindexed) and only for the first year in which an excess contribution occurs. The Government has indicated that consultation on the implementation of this measure will occur.

minimum pension draw down relief phased out

Date of effect: 1 July 2011

The minimum pension withdrawal you are required to make has been halved in recent years as a result of the Global Financial Crisis and its impact on super balances. This draw down relief will be phased out, reducing to 25% for the 2011/12 financial year and returning to the normal rate from 1 July 2013 as per the following table.

Age at start of pension
(and 1 July each year)

In 2010/11

In 2011/12

In 2012/13

Under 65

2%

3%

4%

65 – 74

2.5%

3.75%

5%

75 – 79

3%

4.5%

6%

80 – 84

3.5%

5.25%

7%

85 –89

4.5%

6.75%

9%

90 – 94

5.5%

8.25%

11%

95 +

7%

10.5%

14%

 

higher pre-tax contribution caps at age 50

Date of effect: 1 July 2012

People aged 50 and over with less than $500,000 in super will be able to contribute an extra $25,000 in pre-tax (concessional) contributions each year.

Eligibility requirements do apply, and the change is scheduled to apply from 1 July 2012.

Those over 50 can make pre-tax contributions of up to $50,000 until 1 July 2012 under concessions previously announced, regardless of their super balance.

extension of co-contribution freeze

Date of effect: 1 July 2011

Changes introduced in the previous Federal Budget to curb eligibility for the Government co-contribution scheme have been extended out by an additional year.

This means the current income eligibility levels of $31,929pa for a full contribution and $61,920pa for a partial contribution will remain in place until 2012/13.

reporting of employer contributions on payslips

Date of effect: 1 July 2012

Employers will be required to include the amount of super contributions actually paid into employees’ super accounts on payslips. Super funds will also be required to notify employees and employers on a quarterly basis if regular payments cease.

Continue reading the full budget analysis here:

 

more information?

For more information on how any of these changes may impact your personal situation, please contact us on
07 3833 3999.

The information contained in this Federal Budget Analysis is current as at 11 May 2011 and is prepared by MLC Technical, a division of GWM Adviser Services Limited ABN 96 002 071749, registered office 105-153 Miller Street North Sydney NSW 2060. This company is a Australia Financial Services Licensee and member of the National Australia group of companies. Any advice in this communication has been prepared without taking account of your objectives, financial situation or needs. Because of this you should, before acting on any advice, consider whether it is appropriate to your objectives, financial situation and needs.