Menu
 
Superannuation
Federal Budget 2013/14

No new changes in superannuation were announced as part of the Federal Budget 2013. The series of superannuation reforms previously announced on 5 April 2013 have been confirmed in the Budget.

Higher concessional contribution caps

A higher contributions cap of $35,000 will now apply from 1 July 2013 for those 60 and over, and 1 July 2014 for those 50 and over. In addition, the Government will not limit the higher cap just to those with super balances below $500,000. It applies to everyone who meets the age tests.

For everyone else, the contributions cap will remain at $25,000 (with indexing returning to the cap from 1 July 2014).

Date of effect:
1 July 2013 for those 60 and over
1 July 2014 for those 50 and over

Reform of excess contributions tax
As previously announced on 5 April 2013, the Government will reform the operation of the excess contributions tax.  Under the reforms, excess concessional contributions are taxed at an individual's marginal tax rate, plus an interest charge to recognise that the tax on excess contributions is collected later than normal income tax. In addition, individuals will be allowed to withdraw any excess concessional contributions from their superannuation fund.

Date of effect: Excess concessional contributions made from 1 July 2013

Taxing earnings on super assets supporting income streams
From 1 July 2014, the tax exemption for earnings on superannuation assets supporting income streams will be capped at the first $100,000 of future earnings per individual.  Earnings above $100,000 will be taxed at 15% (the same concessional rate that applies to earnings in accumulation phase).

Special arrangements will apply for capital gains on assets purchased before 1 July 2014:
  • For assets that were purchased before 5 April 2013, the reform will only apply to capital gains that accrue after 1 July 2024;
  • For assets purchased from 5 April 2013 to 30 June 2014, individuals will have the choice of applying the reform to the entire capital gain, or only that part that accrues after 1 July 2014; and
  • For assets that are purchased from 1 July 2014, the reform will apply to the entire capital gain.

Date of effect: From 1 July 2014

Account based pensions lose preferential Centrelink treatment
Currently, account based pensions provide a tax free retirement income stream for the member and flexible access to capital.  Account based pensions also receive preferential concessional treatment under Centrelink pension income testing arrangements compared with income from other assets, such as dividends from shares or interest from term deposits which is subject to deeming.

From 1 January 2015, new superannuation account based income streams will be subject to the standard pension deeming arrangements, which could increase the level of income that is assessed under the income test for Centrelink support.

Date of effect: From 1 January 2015

Lost superannuation inactive account threshold change
Superannuation funds are required to transfer low balance inactive accounts, or those where the member is uncontactable, to the ATO. From 31 December 2015, the account balance threshold below which inactive accounts, and accounts of uncontactable members, are required to be transferred to the ATO will increase to $2,500.  On 31 December 2016 it will then increase again to $3,000.

Date of effect: 31 December 2015

Deferred life time annuities
Deferred lifetime annuities will have the same concessional tax treatment as superannuation assets supporting income streams receive.

Date of effect: 1 July 2014


More from the Federal Budget 2013
Click through to the pages below for details about how the Budget affects you.

Federal Budget 2013 - A Swan song?
Business
Individuals
Tax Measures
Families & Community
Key economic highlights

Want to keep up to date with tax news for small business? Follow batescosgraveCA on LinkedinGoogle+ or Twitter

Last updated May 2013. 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.

Follow Bates Cosgrave on Linkedin, Facebook or Twitter


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.

Share this


Get Small Business News each month


ChineseLanguage Select

Archive
201720162015 | 2014 | 2013 | 2012 | 2011 | 2010


Sign up to our monthly client bulletin.