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Superannuation
Federal Budget 2012/13

If you're a high-income earner with a healthy amount of super, there are some stings in the Budget.

Increased tax on super contributions of the wealthy
As widely reported prior to the Budget, from 1 July 2012 individuals with income greater than $300,000 will have the tax concession on their contributions reduced from 30% to 15% (excluding the Medicare levy).
 
The definition of 'income' for the purpose of this measure includes concessional superannuation contributions.  If an individual's income excluding their concessional contributions is less than the $300,000 threshold, but the inclusion of their concessional contributions pushes them over the threshold, the reduced tax concession will only apply to the part of the contributions that is in excess of the threshold. 'Concessional contributions' for the purpose of the measure includes notional employer contributions for members of defined benefit funds.

The reduced tax concession will not apply to concessional contributions, which exceed the concessional contributions cap and are therefore subject to 'excess contributions tax'. These contributions are effectively taxed at the top marginal tax rate and therefore do not receive a tax concession.
 
The effect of this change will be an increase in tax of up to $3,750 ($25,000 x 15%) for very high-income earners.
 
Date of effect
From 1 July 2012

2-year deferral for higher concessional contributions cap  
The proposed increase to the concessional contribution caps for individuals over 50 with low superannuation balances will be deferred by two years to 1 July 2014.  
 
The higher concessional contributions cap measure would have seen individuals aged 50 and over with superannuation balances below $500,000 able to make up to $25,000 more in concessional contributions than allowed under the general concessional contributions cap.
 
Now, for 2012/2013 and 2013/2014 all individuals have a cap of $25,000. In 2014/2015, the general cap is likely to increase to $30,000 through indexation, and the higher cap would then commence at $55,000.
 
These changes may see an increase in inadvertent contribution cap breaches resulting in further excess contributions tax assessments for clients.  The changes will also reduce the effectiveness of clients using transition to retirement strategies.  
 
SMSF auditor levy and fee increase
ASIC has been provided with $10.7m in funding to develop and maintain an online registration system for auditors of self managed superannuation funds.
 
As part of the registration process, ASIC will develop a competency exam for SMSF auditors. ASIC will also be responsible for the deregistration of non-compliant auditors. Auditors may begin to register with ASIC from 31 January 2013.
 
The Government will also provide $10.6 million over five years (including $1.5 million in capital funding in 2011/2012) to the Australian Taxation Office to police registered auditors, check their compliance with competency standards set by ASIC and refer auditors to ASIC, for enforcement action.
 
The cost of this measure will be offset by increases in the SMSF levy and fees charged by ASIC for sitting the competency exam.

Budget Details
Click through to the pages below for details about how the Budget affects you.

For the greater good
Business
Individuals
Tax Measures
Compliance
Family & Community
Download the 2012/13 Budget Summary

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Last updated May 2012. This article is provided for information purposes only and should not be used in place of advice from your accountant. Please contact us on 02 9957 4033 to discuss your specific circumstances.

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Disclaimer

This article is provided for information purposes only and correct at the time of publication. It should not be used in place of advice from your accountant. Please contact us on 02 9957 4033 to discuss your specific circumstances.

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