News

On Sunday 2^nd May the Federal Government released its response to the long awaited Report of the Review into Australia's Future Tax System, known as the Henry Review. Superannuation has emerged as key component of national savings.

The key changes that relate to superannuation are:

• The Statutory Guarantee (SG) rate is to be increased from 9% to 12% starting in 2013 through to 2019. The first two increases will be 0.25% and then 0.5% each year thereafter.

• The SG age limit will be increased from the current cut off age of 70 up to 75.

• Individuals earning less than $37,000 per annum will be eligible to receive up to $500 as a super contribution from the government.

• The transitional arrangement for persons over 50 to limit contributions to $50,000 per annum was due to end 30 June 2012, this has been extended indefinitely for those with account balances below $500,000.

   

The Henry Report recommended many other taxation matters, which the Government has decided not to take up. In particular the Government has not adopted recommendations that:

• Treat employer contributions as taxable income with rebates available;

• Abolish the co-contribution and spouse tax offset;

• Reducing super fund earnings tax in accumulation while extending tax to encompass Income streams;

• Remove restrictions on contributions for those aged 75 and over; and

• Issues related to longevity insurance and government provided annuities and deferred annuity products.

The may be more changes announced in the budget and over the next few months in relation to simpler tax returns and saving incentives.

There are no changes to the capital gains tax discount (CGT) and superannuation payments for people over 60 remain tax free.