Budget update 2011
19 May 2011
The 11 May 2011 Federal Budget saw the announcement of a range of minor initiatives that will be of interest to members.
Superannuation information on payslips
The Government has announced its intention to mandate that all Australian employees receive information on their payslips about the amount of superannuation actually paid into their account, and that super funds are to provide quarterly updates to employees and employers if regular payments cease, effective 1 July 2012.
Freeze on superannuation co-contribution indexation extended
The Government announced that income thresholds that set a limit on co-contribution eligibility will be frozen for an additional year to 2012/13.
Income thresholds mean the Government will match after tax contributions to super on a $1 for $1 basis up to $1000, for eligible workers earning up to $31,920 pa.
Eligible workers contributing to super after tax, and earning over $31,920 and up to $61,920 pa, will receive a reduced co-contribution.
Refund of excess concessional contributions
For contributions made on or after 1 July 2011, taxpayers who for the first time breach the concessional contribution cap by up to $10,000 will have the option to withdraw the excess concessional contributions out of their super account and have the amount assessed as income at their marginal tax rate, rather than incurring excess contributions tax.
Concessional contributions include employer SG contributions, extra employer contributions and before tax contributions made under a salary sacrifice arrangement. They also include after tax contributions that are claimed as a tax deduction by a self-employed person.
Excess concessional contributions attract an excess contributions tax of 31.5%, in addition to the 15% contributions tax when contributions are made to the fund – a total of 46.5%.
Higher superannuation contribution caps for over 50s
From 1 July 2012, the concessional contributions cap for individuals aged 50 or over with less than $500,000 in superannuation will be set at $25,000 more than the general concession contributions cap for under 50s, taking the 2012/13 cap to $50,000.
Minimum pension payment changes for 2011/12 year
The Government will phase out the pension drawdown relief that has been provided over the last three years. This means allocated pension members have to withdraw at least 75% of the legislated minimum pension payments in 2011/12 (compared to 50% in 2010/11).
Minimum payment amounts for account-based pensions are expected to return to their 2007/08 levels in 2012/13.
The Government previously provided pension drawdown relief in the 2008/09, 2009/10 and 2010/11 years by halving the minimum payment amounts in response to the Global Financial Crisis.
Please be aware the above proposals are not yet law. For further information on the Government's Budget proposals visit www.budget.gov.au.