Well, it’s happened. As we suspected. Our worst fears were realized.
The Labor Government has decided to change the tax laws for our superannuation to top up the budget. The days of smart government to encourage the population to save for its retirement are over.
The government has decided to target the wealthy. How unoriginal.
Basically, earnings on superannuation assets supporting income streams above $100,000 will no longer be tax-free. As of 1 July 2014, all earnings on assets supporting income streams above $100,000 per annum will be taxed at 15%. The change will not affect how withdrawals are taxed. For those over 60, withdrawals will continue to remain tax-free and tax concessions will still apply for those under 60.
This change will affect approximately 16,000 of Australia’s wealthy superannuation pensioners, who are all estimated to have superannuation balances of over $2,000,000.
There is, however, some good news.
Firstly, concessional caps for some superannuation members will be increased. Currently, the concessional contribution cap for individuals is $25,000. This cap will be increased so that:
It is expected that by July 2018, the general concession cap will reach $35,000.
Secondly, from July 2013, taxpayers who exceed their concessional contribution cap will be allowed to withdraw excess contributions from their super fund and only be taxed at the marginal rate. This is fantastic and less penalizing people who make a genuine mistake and miscalculate their contributions into their superannuation fund and pay too much.
Do you want more information on how it affects you?
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