Build & Manage Wealth
Superannuation is the most tax effective structure for the building of wealth for retirement. It is subject to various rules and regulations which, to date, have changed regularly.
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Understanding if Superannuation Guarantee contributions will be made on your behalf in your new role is critical.
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Understanding your ability to make additional tax deductible super contributions, can make an enormous difference in your retirement savings.
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If you are operating under a company structure, being aware of how you can potentially make super contributions more tax effectively will be important.
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You may need to rollover existing superannuation from your previous employer’s fund. Understanding your choices and what alternative super fund is most appropriate for you is critical.
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By leaving your previous employer you may have access to some superannuation benefits that were previously unavailable – do you know what these are?
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Have you kept track of all your previous Superannuation http://www.findmysuper.com.au/
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In the context of your new role, you should consider the benefits of ongoing superannuation contributions for long term wealth accumulation and tax concessions
Changes to Super
Federal Budget 2009-10
Superannuation
Concessional superannuation contributions cap halved
From 1 July 2009, the concessional contributions cap will be halved. The maximum amount of concessional contributions that may be made before penalty tax applies will reduce from $50,000 to $25,000 (indexed) and for those aged 50 years or more, the transitional cap reduces from $100,000 to $50,000. From 1 July 2012, this latter group will be subject to the lower $25,000 (indexed) cap. Indexation is still expected to apply based on increases in Average Weekly Ordinary Time Earnings (AWOTE) in $5,000 increments (rounded down). Concessional contributions include Superannuation Guarantee contributions, salary sacrifice contributions and personal contributions for which a tax deduction is claimed.
Non-concessional contributions cap remains unindexed
Currently, the non-concessional (i.e. after-tax) contributions cap is $150,000 per annum or $450,000 over a three year period. This cap was due to be indexed from 1 July 2009 to $165,000 per annum. The Government has announced that the current $150,000 per annum limit will remain in place for 2009 – 10. Therefore, there will be no advantage in delaying non-concessional contributions until after 1 July 2009 to take advantage of indexation. In the future, the non-concessional contributions cap will be calculated as six times the level of the indexed concessional contributions cap.
Temporary reduction in government co-contribution
The Government is temporarily reducing the matching rate of the superannuation co-contribution and the maximum amount payable to workers. For contributions made between 1 July 2009 and 30 June 2012, the matching rate will be reduced from 150 per cent to 100 per cent and to 125 per cent for contributions made between 1 July 2012 and 30 June 2014. The co-contribution matching rate will return to 150 per cent from 1 July 2014. This means that low to middle income earners will be limited in their ability to build up their retirement savings. For example, workers earning less than $30,342 who contribute $1,000 from their after-tax income will only receive a $1,000 co-contribution from the Government for the next three years.
The income thresholds are as follows:
income 2008 – ‘09 |
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$30,342 |
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$60,342 |
Eligibility for the co-contribution reduces at the rate of $0.05 per $1 above the lower threshold and ceases above the upper threshold in 2008-09. In 2009-10 and later years, the shade out rate will temporarily decrease to 3.333 cents per $1 above the lower threshold.
