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Super changes in the Budget

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by Paul Rickard

Paul Rickard from Switzer Financial Planning summarizes the changes to superannuation and other budget changes that will hit mature Australians:

  1. The Super Guarantee levy has been pushed back by one year. It will increase to 9.5% on 1/7/14, and then be frozen until 1/7/18. Previously, the levy reached 12% by 1/7/19 under Labor, 1/7/21 under the Coalition promise, now 1/7/22.
  2. Excess non-concessional contributions – excess contributions tax eliminated (positive)- now refunded, any earnings taxed at marginal rate.
  3. Increase in caps (positive) – concessional $30,000, non-concessional $180,000.
  4. Australian Defence Force Super – new recruits from 1/7/16 end of defined benefit).

 
Other changes

  1. The Mature Age Tax Offset abolished from 1/7/14 (previously restricted).
  2. Dependent Spouse Tax Offset abolished from 1/7/14 (previously restricted).

 
Pension Changes

  1. The pension age will rise to 70 by 2035.
  2. Indexation by CPI (rather than average male OTE) from September 2017.
  3. Indexation of asset test/income test thresholds frozen for three years from 2017.
  4. Deeming rates (for income test) reset to $30,000/$50,000 from 2017 (currently $46,600/$77,400).

 
Commonwealth Seniors health card

  1. Superannuation balances are to be counted in the income test (presumably at the deeming rate) – which makes it harder for non-pensioners to qualify (income limits currently $50.000/$80,000).
  2. No Seniors supplement – abolished from 1/7/14  ($876.20 for single, $1,320.80 couple).

 

Published on: Wednesday, May 14, 2014

The Switzer Super Report is a newsletter and website for self managed super funds. With exclusive commentary from Peter Switzer, Roger Montgomery, Paul Rickard and Charlie Aitken the Switzer Super Report will help you maximise your after tax investment returns and grow your DIY Super. Click here for a free trial or subscribe today.

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