Australian Federal Budget 2010 – Superannuation Changes

Main points…

• Compulsory super will rise from 9% to 12% of salary in increments from July 2013 to July 2019
• People over 50 will be able to make annual tax concessional super contributions of $50,000 if their fund balance is under $500,000.  Those with a  higher balance will be limited to annual contributions of $25,000
• Temporary cuts to the super contribution announced previously will be permanent BUT people with income under $37,000 will receive an annual super contribution from government of up to $500

In more detail…

• The temporary cuts to the super co-contribution announced in the previous budget will be permanent and the maximum income used to determine eligibility will be frozen for 2 years

• Super funds will be able to claim a tax deduction for benefits paid for a terminal illness

• The Australian Tax office will be able to exercise its discretion regarding excess contributions tax before issuing an assessment to a taxpayer.  However, this does not mean that the ATO will have any greater discretion to waive penalty tax according to Treasury.

• DIY super funds that use instalment warrants to buy shares or property will have greater certainty about the ownership of the assets.

• People over 50 will be able to make annual tax concessional super contributions of $50,000 if the balance of their fund is less than $500,000.  Those with a higher balance will be limited to annual contributions of $25,000.

• People with income of $37,000 or less will receive an annual super contribution from government of up to $500.

• Employees will be able to receive compulsory super until the age of 75 (up from 70, currently).