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13 May 2009
One of the most far-reaching changes announced
in the 2009-10 Federal Budget was that the
concessional contributions cap will be reduced
from $50,000 to $25,000 per annum with effect
from 1 July 2009. The transitional concessional
contributions cap (which is applicable to
individuals aged 50 and over) will be reduced
to $50,000 per annum. The annual cap on non-concessional
contributions will remain at $150,000 per
annum and will be set at six times the concessional
cap in future years.
|
New Superannuation
Contribution Limits
|
|
| |
Concessional
(deductible) limit
|
Transitional Concessional
(deductible) limit
|
| Financial Year |
Old
|
New
|
Old
|
New
|
| 2008/09 |
$50,000
|
-
|
$100,000
|
-
|
| 2009/10 |
$55,000
|
$25,000
|
$100,000
|
$50,000
|
| 2010/11 |
$55,000
|
$25,000
|
$100,000
|
$50,000
|
| 2011/12 |
$60,000
|
$25,000
|
$100,000
|
$50,000
|
| 2012/13 |
$60,000
|
$25,000
|
$60,000
|
$25,000
|
| 2013/14 |
$60,000
|
$25,000
|
$60,000
|
$25,000
|
| Concessional
contribution caps have been calculated
as the 2009-10 concessional cap indexed
to AWOTE at 4% pa, rounded down to the
nearest $5,000 |
These changes could have a significant
impact on many tax and investment strategies.
Those people who are currently making large
salary sacrifice contributions will need
to ensure that they do not breach the new
limits during the 2009-10 financial year.
Excess concessional contributions are subject
to tax of 31.5% plus 15% contributions tax
and they also count towards an individual's
non-concessional contributions cap. It is
therefore vital to get the numbers right.
For younger workers who are only receiving
9% superannuation guarantee contributions
from their employer, the need to start making
additional contributions is now greater
than ever because the ability to make large
contributions closer to retirement has been
severely curtailed.
Transition to Retirement (TTR) Pensions
While there were no specific changes announced
regarding TTR income streams, the new contribution
caps might impact on individuals who are
making large salary sacrifice contributions
and drawing a TTR pension.
People aged over 50 who are currently
undertaking TTR strategies and who make
concessional contributions of $50,000 or
less per annum will not be impacted by the
contribution cap change. But those who are
making concessional contributions in excess
of $50,000 will need to review their strategy
to ensure it is re-balanced for the post
1 July 2009 rules. This might require:
-
reducing the amount of their salary sacrifice
contributions;
- reducing the income
they take as a TTR pension;
- rolling some of their
TTR pensionn back into accumulation phase;
or
- perhaps contributing
surplus income as personal after-tax contributions.
Minimum pension
drawdown rules extended
The Federal Government
has confirmed that the 50% reduction in
minimum annual pension payments, first announced
in February 2009, will be extended into
the 2009-10 financial year. The reduction
applies to account-based, allocated and
market-linked (term allocated) pensions
and annuities.
|
Minimum
pension drawdown rules
|
|
| Age |
Minimum annual pension
payment
|
Minimum
annual pension payment for 2009-10
|
| Under
65 |
4%
|
2%
|
| 65-74 |
5%
|
2.5%
|
| 75-79 |
6%
|
3%
|
| 80-84 |
7%
|
3.5%
|
| 85-89 |
9%
|
4.5%
|
| 90-94 |
11%
|
5.5%
|
| 95
and over |
14%
|
7%
|
Government Co-contributions cut
The maximum Government co-contribution
has been temporarily reduced from $1,500
per annum to $1,000 per annum. This will
apply to eligible personal superannuation
contributions made on or after 1 July 2009.
At the end of 2011-12, the co-contribution
matching rate will be gradually increased
until it returns to the 150% level in 2014-15.
The lower and upper co-contribution thresholds
will not be impacted and will continue to
be indexed to average weekly earnings.
Personal income tax rates reduced
The new personal income tax thresholds for
the 2009-10 will be as follows.The rates
are similar to those that applied in 2008-09
except that the income threshold for the
30% tax rate has been increased from $34,000
to $35,000 and the 40% tax rate has been
reduced to 38%.
|
Personal
income tax rates
|
|
|
Current Rates
|
From 1 July 2009
|
|
Income $
|
%
|
Income $
|
%
|
|
0 - 6,000
|
0
|
0 - 6,000
|
0
|
|
6,001 - 34,000
|
15
|
6,001 - 35,000
|
15
|
|
34,001 - 80,000
|
30
|
35,001 - 80,000
|
30
|
|
80,001 - 150,000
|
40
|
80,001 - 180,000
|
38
|
|
180,000 +
|
45
|
180,000 + |
45
|
Warning:
The information contained on this page is
based on our interpretation of the Budget
Statements and accompanying documents. While
all care has been taken in the preparation
of this document (using sources believed
to be reliable and accurate), we do not
accept responsibility for any loss suffered
by any person arising from reliance on this
information. This document is not financial
product advice and does not take into account
any individual's objectives, financial situation
or needs.
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