What’s happening in your super?

B2B Editor1 July 2014

What’s happening in your super?

This update covers announcements in the Budget and other changes over recent months. As Budget announcements may not necessarily become law, they are subject to change.

Tax deductible contribution caps

From 1 July 2014 the concessional contribution cap will rise from $25,000 to $30,000. In addition, anyone aged 50 or more at any time during the year may contribute up to $35,000.

Non deductible contribution caps

The non concessional contribution cap will rise from $150,000 to $180,000 from 1 July 2014. For persons under 65 who have access to averaging provisions, this means the “bring forward” cap changes from $450,000 to $540,000.

The bring forward rule allows persons under 65 on 1 July to bring forward the following two years’ contributions. Please note if you have already triggered the bring forward rule in the 2013 or 2014 financial year then you will still only have access to the current $450,000 cap.

Penalty regime

The Australian Taxation Office (ATO) has historically only had two courses of action for SMSF compliance breaches – writing letters or making a fund non-complying with significant tax penalties.

From 1 July 2014 the ATO will be able to issue monetary penalties, require a breach to be rectified or require a trustee to undertake education.

We wrote to the minister on your behalf to confirm that the ATO will use discretion, and that some breaches will result in no penalties. The minister replied yes.

Making sure your bank account doesn’t go into overdraft and checking with us prior to any unusual investment transaction will reduce your risk of a breach.

Age pension

Currently, superannuation fund income is not considered for the age pension income test. However for persons receiving the age pension orthose who may be eligible for a seniors health care card, any new income stream commenced after 31 December 2014 will now be counted for the income test.

Please note to fall under the existing rules members must have received at least one income stream payment prior to 1 January 2015. For those members who draw down annual amounts in June each year you may wish to change to monthly drawdowns from July 2014.

The Budget also included announcements on: increasing age pension access to age 70, having the biannual indexation at a lower rate, changing deeming rules which will result in more income being counted and freezing the asset and income tax thresholds for 3 years from 2017.

We expect that final law will not include all these measures, or there will be variations.

For more information, please contact Michelle van Lier, of RSM Bird Cameron, on 6217 0316 or[email protected].