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2010 Budget - what it means for super
Date: 8/06/2010

2010 Budget - what it means for super

The 2010 Budget and the Government’s response to the Henry Tax Review contained a number of measures that could affect your super.

Fixed limits for contributions
The under age 50 before-tax contributions limit will remain at $25,000, while for those aged 50 or over the transitional before-tax contributions limit will remain at $50,000 for the 2010/11 and 2011/12 financial years. These limits include employer and any salary sacrifice contributions.

The after-tax contributions limit will remain at $150,000 for 2010/11.

From 1 July 2012, persons over age 50 with a total superannuation balance of less than $500,000 will continue to have a before-tax contributions limit of $50,000 (indexed).

Permanent reduction to the Government co-contribution
The maximum superannuation co-contribution payable will be permanently reduced to $1000. Previously, it was intended that the maximum co-contribution would be reduced from $1500 to $1000 for a period of 3 years, before increasing to $1250 for 2 years and then returning to $1500 from 1 July 2014.

During 2010/11 the Government will put in $1 for every $1 you contribute to your super, if you are employed and your total income is less than $31,920 p.a. The co-contribution will gradually reduce for incomes above $31,920 p.a. before cutting out completely for incomes above $61,920 p.a.

The eligibility thresholds for the co-contribution will continue to apply for the 2011/12 financial year. The thresholds will start to be indexed from 1 July 2012.

Government contributions tax rebate for low income earners
From 1 July 2012, the Government will introduce an annual $500 rebate to superannuation for low income earners with an adjusted taxable income below $37,000, to offset the contributions tax payable on their SG contributions.

Personal income tax rates lowered
From 1 July 2010, the 30% income tax threshold will increase from $35,001 to 37,001 and the marginal tax rate for incomes between $80,001 and $180,001 will reduce from 38% to 37%.

 

The low-income tax offset will increase from $1350 to $1500 for those eligible. This means that no income tax will be payable on the first $16,000 of income.

Persons eligible for the Senior Australian Tax Offset can now earn $30,685 (singles), or $26,680 each (couples), before paying income tax or the Medicare Levy.

An increase to the Superannuation Guarantee (SG) rate
In its response to the Henry Review, the Government announced its intention to increase the SG rate from 9% to 12% over a 7-year period. The rate will increase from

1 July 2013 as follows:

 

An increase to the eligibility age for SG
Currently employers are required to pay SG contributions for employees who are under age 70. In response to the Henry review, the Government has announced an increase to the eligibility age to 75 from 1 July 2013.

Tax discount on savings interest

From 1 July 2011, a 50% tax discount will apply for the first $1000 of interest earned on a range of savings products, deposits held in banks, building societies and credit unions, bonds, debentures and annuity products.

Please note, all of the measures outlined above are proposals only and have not yet been legislated.