Understanding the super rules from July 2012

With the new Financial Year almost upon us, it is worth a quick review of what the superannuation contribution rules look like before and after 30 June.

	2011/12 Financial Year	2012/13 Financial Year	Comments
Over 50’s Concessional Contributions Cap	$50,000 limit	$25,000 limit.	Was hoped this would be extended for over 50’s with <$500,000 of super, but proposal has been delayed 2 years.
Under 50’s Concessional Contributions Cap	No change, $25,000
Government Co-Contribution	Dollar matching, maximum $1,000 for incomes below $31,920, phasing out to nil at $61,920	50c matching, maximum $500 for incomes below $31,920, phasing out to nil at $46,920
Low Income Government Superannuation Contribution	N/A	A government payment to super, max $500, being a refund of contributions tax for individuals earning up to $37,000	Note 9% compulsory super x $37,000 x 15% contributions tax = $499.50
Contributions tax rate (high earners, assuming within Concessional Contribution limit)	15%	15% (+ 15% where income exceeds $300,000)	Note: where Concessional Contribution limit is exceeded, the excess amount is taxed at a total rate of 46.5%

Tips leading into the new financial year:

Over 50’s should revisit their super contribution arrangements in light of the reduced cap.
Similarly, those earning between $46,920 and $61,920 who were previously targeting the government co-contribution will now find themselves missing out, and should reassess.
Over 55’s who have implemented a Transition to Retirement Income Swap strategy should revisit their plan with their adviser, to ensure optimal draw down and contribution rates.
High earners, in view of the additional tax, may need to review their overall retirement savings plans and consider whether greater non-super or after-tax super contribution strategies are worth investigating.

As always, to assess what these changes mean for you in greater detail, please contact AGS Financial Group.

Published : 16 Jun 2012