PJT Accountants

How will the Budget affect your Superannuation?

12 May 10
Superannuation Guarantee Changes

These changes were previously announced in the Henry Report. This is the movement of the superannuation guarantee amount for employees from 9% to 12% in 2019-20. The increases will begin in 2013-14 as follows:



"As employers, it would be beneficial to be communicating to your staff that their salaries are including Superannuation", Melanie Jacobson said.  "For younger workers, the concern is if they will value this extra money going into Superannuation which they are unable to access until they are 60 (which could increase in the future).  At the end of the day, either business will pay with an increase in wage costs or the individuals will have a decreased in take home pay."


Employer contributions (super guarantee) age limit will also increase from 70 to 75 from 1 July 2013.

Co-contribution Matching rate permanently reduced to 100% and eligible income thresholds frozen

The Government announced that it will look to permanently set the matching rate for the superannuation co-contribution at 100% and the maximum co-contribution that is payable on an individual’s eligible personal non-concessional superannuation contributions at $1,000.
As a result, the previously-legislated increase in the matching rate to 125% for 2012-13 and 2013-14 (and 150% for 2014-15 and later years) will not proceed.

In addition, the Government said it will freeze for 2010-11 and 2011-12 the indexation applied on the income threshold above which the maximum superannuation co-contribution begins to phase down. Under the superannuation co-contribution scheme, the Government currently provides a matching contribution for contributions made into superannuation out of after-tax income. The matching contribution is up to $1,000 for individuals with incomes of up to $31,920 in 2009-10 (with the amount available phasing down for incomes up to $61,920). This measure will freeze these thresholds at $31,920 and $61,920 for 2 years.

Government Super Contribution For Low Income Earners
Individuals with an adjusted taxable income up to $37,000 will have a 15% matching rate applied to concessional contributions made up to a maximum annual amount of $500.

Concessional Superannuation Caps
These are contributions which you are able to claim a tax deduction for.  Previously the cap of $50,000 for over 50’s was to decrease to $25,000 form 1 July 2012.  This has now been abolished and the cap will stay at $50,000 for those over 50 with less than $500,000 in superannuation.

The will benefit those clients who are over 50 and salary sacrificing into Superannuation to save for their retirement. The issue from our perspective is that many people with less than $500,000 in superannuation will not have the cashflow to make these extra contributions and it is reducing the opportunities available for those who are wanting to use superannuation as an investment vehicle for their retirement savings.

If you are going to be affected by these changes it is important that you review your situation for this year and next be reviewing their strategies to maximize the amount that you are available to put into superannuation.


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