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Superannuation Changes 2014

  • Thursday, 01 January 2015 06:33

SUPERANNUATION GUARANTEE (SG) RATE INCREASE FROM 9.25% TO 9.5% increase

The Government has announced a further one year delay to the timeframe for increasing the SG rate to 12%. The SG will now increase to 9.5% on 1 July 2014 and remain at this level until 30 June 2018 and then increase by 0.5% each year until it reaches 12% from 1 July 2022.

LOW INCOME SUPERANNUATION CONTRIBUTION (LISC) SCHEME TO BE AXED

The Government is pressing ahead with its decision to axe the Low Income Superannuation Contribution Scheme, which provides an annual super benefit of up to $500 for individuals earning less than $37,000.

CONCESSIONAL CONTRIBUTION CAPS

The concessional contribution caps are changing from 1 July 2014.

Age <49 Cap $30,000

Age 49+ Cap $35,000

ABILITY TO WITHDRAW EXCESS NON-CONCESSIONAL CONTRIBUTIONS

The government will allow individuals the option of withdrawing superannuation contributions in excess of the non-concessional contributions cap which avoids excess non-concessional contributions tax. Currently, contributions that exceed the non-concessional contributions cap are taxed at the top marginal tax rate. Non-concessional or personal contributions are post-tax contributions. Individuals who leave their excess non-concessional contributions in their superannuation fund will continue to be taxed on these contributions at the top marginal tax rate.

KEY CHANGES TO PENSIONS

From 1 July 2017, pension increases will be linked to inflation (CPI) rather than average weekly earnings. Over time, this will make superannuation savings even more important. The Government has also announced a tightening of the Age Pension means test with a three year freeze on all pension asset test and income test thresholds from 1 July 2017.

The Government announced that, from 1 July 2025, the Age Pension qualifying age will continue to rise by 6 months every 2 years, from the qualifying age of 67 years that will apply by that time, to gradually reach a qualifying age of 70 years by 1 July 2035. People born before 1 July 1958 will not be affected by this measure. These changes do not impact the age at which you can access your superannuation. Current pensioners and older workers approaching retirement will not be affected by this change.

 

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