Client information
How the Federal Budget superannuation changes may affect you
There have been a number of proposed changes to the superannuation rules recently announced in the Federal Budget. While most of these are only minor changes, some may impact your individual situation and our Financial Planners are here to change the lives of our members for the better by helping you make sense of it all.
Concessional contributions caps halved
Proposed date of effect: 1 July 2009
For those under 50 years of age, the concessional cap will be $25,000 for the 2009-10 financial year. For those over 50 years of age, the transitional concessional cap will be $50,000 up to the 2011-12 financial year.
What this means for you
It’s a good idea to review your salary sacrificed super contributions for the 2008-09 financial year, particularly as the limits that can be contributed next year will be halved. If your budget allows it, you may be able to pay extra into your super this year up to the current cap amount for your age. Note though that there may be a timing issue where your June salary sacrificed contribution or bonus is deposited in your superannuation account in July 2009. Please ensure you check this when making any salary sacrificed adjustments to avoid incurring Excess Contributions Tax of 31.5% or more.
Moving forward, it is important you review your contributions for the upcoming 2009-10 financial year. You must be aware that the SGC amount (the 9% amount that CUA has to put into super for you) is included in the contribution cap of $25,000 for those under 50 years of age and $50,000 for those over the age of 50.
There may be cases where those who will be reducing their contribution to super because of the proposed changes will want to look at other options to invest excess income and look for alternative tax effective investment options.
For staff who have implemented the ‘Transition to Retirement’ strategy, you may need to reduce payments from the pension as you will be getting more take home income due to the reduced salary sacrifice amount.
Please bear in mind that if these contribution caps continue, those wishing to boost their retirement income in the future will need to look at contributing greater amounts into super sooner rather than later, within the cap amounts of course.
Find out more about the Federal Budget changes
There have been other minor changes proposed to superannuation, including the reduction of the Government co-contribution benefit. A comprehensive summary of the Federal Budget changes is available here. However, if you would like more personalised advice, you can call us on 1300 655 014 to arrange to meet with one of our financial planners.
Paul Geisel
Head of Financial Planning
