So, the 2013 budget is out! The media hype has settled, and depending on the results of the next election, it is debatable as to whether any of the measures relating to superannuation will see the light of day in Parliament. But let’s look at some of the proposed changes, as you never know whether the next elected government will run with them or not.
Pension Income over $100,000 to be taxed at 15%. It is proposed to be introduced from 1 July 2014 and it is not clear whether the $100,000 in earnings will be fund based or member based, so we can’t even begin to plan strategies to minimize the effect of this measure. The good news to keep in mind is that there is no talk of any tax on pension or lump sum payments coming out of super if you are over 60 years of age.
Deductible Contributions Cap to increase to $35,000 pa, from the 1 July 2013, for those who are over 60 years of age. From the 1 July 2014, the age limit to this measure will come down to those over 50 years. This measure was introduced to Parliament on 15 May 2013, but at the time of writing this article, had not been passed as legislation. If you are under 50 years of age, you are still restricted to a $25,000pa. concessional cap which is to be indexed each year (remember when the cap used to be $100,000 for every one?).
Of interest, is that the non-concessional cap of $150,000 pa. introduced in the 2008 financial year is also an ‘indexed’ cap, but hasn’t changed since 2008.
Speaking of caps, exceed either of the caps and you could be in for a nasty 46.5% or 93% excess contributions tax. This budget has proposed to reduce this penalty tax to the individual’s marginal tax rate. Again however, the proposal will not be introduced until after the next election, so we still need to wait and see…
We can also point out that another onerous measure announced in the 2012 budget, was the proposal that those with incomes over $300,000 would pay an extra 15% tax on the amount in excess of $300,000. While introduced as a Bill in February 2013, with draft regulations released in May 2013, it has not seen the light of debate or consideration since. So, as at the date of writing, this is not yet law and if not passed prior to the next election, would have to start from scratch again under the next government.