Federal Budget 2014/15 - Superannuation

May 2014

Super Guarantee rate increase rephasing

Some clarity at last on what is happening with the superannuation guarantee (SG) rate.

The previous Government introduced changes to the superannuation guarantee rate to bring it up to 12% by 1 July 2019 funded by the mining tax (Minerals Resource Rent Tax).

The current Government then sought to slow down the increase when it tried to repeal the mining tax. But the repeal of the mining tax is stuck in the Senate leaving everyone in limbo about the Government's intentions for the SG rate.

The way it will work is that the SG rate will increase from 9.25% to 9.5% from 1 July 2014. The SG rate will remain at 9.5% until 30 June 2018 and then increase by 0.5% each year until it reaches 12%.

Year	Superannuation guarantee charge %
1 July 2013 - 30 June 2014	9.25%
1 July 2014 - 30 June 2018	9.5%
1 July 2018 - 30 June 2019	10%
1 July 2019 - 30 June 2020	10.5%
1 July 2020 - 30 June 2021	11%
1 July 2021 - 30 June 2022	11.5%
1 July 2022 onwards	12%

Managing excess contributions

Effective: 1 July 2014

As previously announced by the Government, for any excess contributions made after 1 July 2013 which breach the non-concessional contributions cap, the Government will allow individuals to withdraw those excess contributions and associated earnings.

If an individual chooses this option, no excess contributions tax will be payable and any related earnings will be taxed at the individual's marginal tax rate.

Individuals who leave their excess contributions in the fund will continue to be taxed on these contributions at the top marginal rate.

Final details will be released following consultation.

For more information about how the Federal Budget superannuation, please contact us on 02 9957 4033 or via our contact form.