Superannuation Changes

NEW GOVERNMENT SUPER PAYMENT FOR LOW INCOME EARNERS

A new government super payment, called the low income super contribution (LISC), started on 1 July 2012. It will help eligible low income earners save for their retirement.

LISC is for people who have an adjusted taxable income of $37,000 or less per year. People who are eligible for LISC will get a government super payment that is 15% of their concessional contributions, which includes super payments that an employer makes on a person's behalf from their before-tax income. The maximum payment will be $500.

The Australian Taxation Office (ATO) will work out your eligibility using information on your tax return or, if you don't lodge a tax return, using other information that they collect.

If you lodge an income tax return, you will receive your LISC in your super account when the ATO has processed your income tax return and received information from your super fund about your super contributions. If you do not lodge an income tax return, the ATO will work out your eligibility using contributions information from your super fund along with other information they collect.

As the ATO will pay the LISC directly into your super fund, you need to make sure your super fund has your tax file number, as they cannot send your LISC to a fund that does not have your tax file number. Your super fund will let you know on your account statement that you have received your LISC. It may take up to 14 months from the end of the financial year for you to receive your payment.

You can apply to have your LISC paid directly to you if either of the following apply:

• you have reached the 'preservation age' (currently 55 years old) and are retired;
• you are 65 years old or over (even if you haven't retired).

SUPERANNUATION CONCESSIONAL CONTRIBUTIONS CAP

From 1 July 2012, the concessional contributions cap for superannuation has reduced to $25,000 for everyone, regardless of their age. The change is due to:

• the transitional concessional contributions cap for individuals aged 50 years and over expiring on 1 July 2012; and
• a proposed new policy that will allow people aged 50 and over with low account balances to make concessional contributions up to $50,000 per year without incurring excess contributions tax, being deferred for two years until 1 July 2014.