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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.
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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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