On July 1 2007 there were a number of changes to super. One of the main changes was to put a limit on the size of your super contributions.
Basically the changes are as follows;
- Superannuation benefits are now tax free for people aged 60 and over.
- Benefits paid from an untaxed scheme (mainly affecting public servants) are still taxed, although at a lower rate than tthey were previously for people aged 60 and over.
- If, under the law, you are allowed to retire and access your super before age 60, your right to do so has not changed, but you will be taxed on your benefits under new simplified rules.
- From 20 September 2007 the pension 'assets test' taper rate was halved to $1.50 per fortnight for every $1,000 of assets above the assets test free area.
- Reasonable Benefit Limits (RBLs) has been abolished.
- You now have greater flexibility as to how and when to draw down your superannuation in retirement. Super funds can no longer be forced to pay benefits.
- You are now able to make deductible super contributions up to age 75, but limits apply to how much you can contribute.
What does this mean for your contributions?
Before tax contributions.
- Prior to July 1 2007, the money your employer contributes to your super fund on your behalf is taxed at a rate of only 15%.
- Under the new rules, your total contributions will be limited to $50,000 per year, taxed at 15%.
- If your total before-tax contributions exceed the limit, you will be taxed on the excess at the top marginal tax rate (plus Medicare levy).
- If you were aged 50 or turning 50 between 2007/08-2011/12, your contributions will be limited to $100,000 per year. From the 2012/13 year, the maximum amount of contributions taxed at 15% will return to the indexed $50,000 amount. (The $100,00 limit will not be indexed.)
After tax contributions
- Prior to July 1 2007, you could contribute an unlimited amount of your own money after tax at any time, up to a certain age, to your super.
- Under the new rules, your after tax contributions will be limited to $150,000 per year.
- If your after tax contributions exceed the limit, you will be taxed at the top marginal tax rate (plus Medicare levy).
- For after-tax contributions made before 30 June 2007, a transitional $1 million limit applied.
- If you're under age 65 and want to make a larger contribution, you are now allowed to bring forward two years of contributions. For example, you could contribute $450,000 in 2007-08 but will then be unable to make further after tax contributions until the 2010-11 financial year
Please contact your financial advisor to confirm the information above.
Source; Australian Government Treasury, Australian Securities and Investment Commission.
|
| |
