|Budget Implications on Self Managed Super Funds|
If you're planning for retirement or have your own SMSF, you would have been watching the Federal Government's Budget announcements with keen interest. There have been a few changes to superannuation again, as this seems to be an ongoing easy target for governments trying to balance their budgets.
In saying this self managed superannuation funds are still a viable option for small business as it gives flexibility and access to markets which some retail and industry funds don’t allow.
Retirees, or those planning it may need to change their investment strategies in the 2012/13 financial year however, following announced changes in the Federal Budget.
Those over 50 will now have their voluntary superannuation contributions capped at $25k, and high income earners will have tax concession on their contributions halved.
If you're gearing towards retirement, then read on to see how the changes may impact you.
2 year deferral for higher concessional contributions cap
In 2011 it was announced that the government would increase the concessional contribution caps to $50,000, for individuals over 50 with lower superannuation balances under $500,000, however in the 2012 budget this was deferred by two years to 1 July 2014. The measure would have seen individuals aged 50 and over with superannuation balances below $500,000 able to make up to $50,000 ($25,000 more in concessional contributions).
Increased tax on super contributions of the wealthy
From 1 July 2012 individuals with income greater than $300,000 will have the tax concession on their contributions reduced from 30% to 15% (excluding the Medicare levy).
The definition of 'income' for this includes concessional superannuation contributions. If an individual's income excluding their concessional contributions is less than the $300,000 threshold, but the inclusion of their concessional contributions pushes them over the threshold, the reduced tax concession will only apply to the part of the contributions that is in excess of the threshold. 'Concessional Contributions' includes notional employer contributions for members of defined benefit funds.
The reduced tax concession will not apply to concessional contributions which exceed the concessional contributions cap as they are subject to 'excess contributions tax' instead. These contributions are effectively taxed at the top marginal tax rate and therefore do not receive a tax concession.
SMSF auditor levy and fee increase
ASIC has been provided funding to develop and maintain an on line registration system for auditors of self managed superannuation funds. As part of the registration process, ASIC will develop a competency exam for SMSF auditors. ASIC will also be responsible for the deregistration of non compliant auditors. As part of these changes, expect that any audit insurance fees and levies may increase as a result.
If you need any assistance with your Self Managed Superannuation Fund or would like the changes better detailed, please contact our team at any time.