Superannuation changes from 1 July 2014

Posted on 10th August 2014 by Christabelle Harris

There are a number of changes that have come into effect for the new financial year regarding contribution caps, excess contributions, superannuation guarantee increases, government co-contributions and super contributions tax rebates for low income earners.
It’s important that you are aware of how these might affect you.

Contribution Caps
Outlined below are the current year contribution caps for the period 1/7/14 – 30/6/15:

Concessional Contributions Cap
(Employer or self employed contributions including salary sacrifice amounts)
$30,000 (up to age 49 at 30/06/2014)
$35,000 (Age 49+ at 30/06/2014)

Non-concessional Contributions Cap
$180,000 or $540,000 over 3 years

Please be aware if you are over 65 years of age you need to meet the work test to qualify to contribute to super. There are also restrictions on using the 3 year bring forward provisions for those 65 years and over. Please contact our office if this is something you are considering, to ensure you do not exceed the limits.

Excess Concessional Contribution
From 2013-14 and later years, excess concessional contributions are included in an individual’s taxable income (with a non-refundable tax offset equal to the 15% tax paid by the fund).

Should you receive an excess contribution assessment, you will have the option of paying the excess contribution tax personally or through the super fund.

Any concessional contributions in excess of the cap will count towards your non-concessional contributions cap.

Excess Non Concessional Contribution
The Government has announced that an individual with contributions in excess of their non-concessional contributions cap will be allowed to withdraw those excess contributions and associated earnings. As a result, individuals will not be subject to the excess non-concessional contributions tax but will be taxed on these contributions at their marginal rate. This measure will bring in line the treatment of excess non-concessional contributions with that of excess concessional contributions.

This measure will apply retrospectively to excess non-concessional contributions made from 1 July 2013.

Superannuation Guarantee Increases
It is proposed to freeze the Super Guarantee (SG) rate at 9.5% from 1 July 2014 until 30 June 2018 when it will increase by 0.5% each year until it reaches 12% on 1 July 2023 as follows:

Financial Year                                          SCG percentage proposed
1 July 2014 – 30 June 2018                                        9.5%
1 July 2018 – 30 June 2019                                      10.0%
1 July 2019 – 30 June 2020                                     10.5%
1 July 2020 – 30 June 2021                                     11.0%
1 July 2021 – 30 June 2022                                     11.5%
1 July 2022 – 30 June 2023                                     12.0%

Superannuation Government Co-Contributions
From 1 July 2014 the higher income threshold against which the co-contribution is assessed has been increased from $46,920 to $48,516 and the lower income threshold has been increased from $31,920 to $33,516.

Super Contributions Tax Rebate for Low-Income Earners
The low income super contribution (LISC) is a government super payment of up to $500 per financial year to help low income earners. The LISC is 15% of the concessional contributions you or your employer makes from 1 July 2012. For example should you qualify and concessional contributions of $3,000 are made into your superannuation fund, the Tax Office will pay $450 into your super fund. The maximum payment you can receive for a financial year is $500.

The Australian Taxation Office will use the information on your income tax return to work out your eligibility for the LISC. If you do not lodge an income tax return, the Taxation Office will work out eligibility using other information collected.