In releasing the 2011-12 Mid-Year Economic and Fiscal Outlook (MYEFO) on 29 November 2011, the Treasurer said that GDP growth would not grow as strongly as forecast and that forecast tax receipts had been written down by more than $20bn over the forward estimates. He said global economic and financial conditions had “deteriorated markedly in recent months”. As a result, the Government announced a number of significant tax and superannuation changes.
Superannuation changes
- The Government will pause the indexation of the superannuation concessional contributions caps for one year in 2013-14.
- In response to industry feedback, the Assistant Treasurer said the Government would undertake further consultation on compliance cost issues raised by industry in relation to the higher concessional contributions cap for those aged 50 and over.
- The Government will streamline the low income superannuation contribution (LISC) so that individuals automatically benefit from it without being burdened with extra paperwork. Rather than requiring eligible workers to fill out a tax return or other type of form, the ATO will verify an individual’s income using available data.
- Individuals who receive less than 10% of their income through employment or business will not be eligible.
- Individuals will only receive a payment if their LISC entitlement is at least $20, to reduce administration costs.
- The Government will reduce the matching rate and maximum payment of the voluntary superannuation co-contribution from 1 July 2012, when the new LISC commences. [No details were given of these reductions.]
- The Government will extend to the 2012-13 year the current drawdown relief for minimum payment amounts for account-based, allocated and market linked pensions. [This means the minimum drawdown for these pensions will be 75% of the required amount for the 2011-12 and 2012-13 years ie a 25% reduction in the minimum drawdown amounts.] Regulations giving effect to this change will be made before the new financial year.
Source: Treasurer’s press release Nos 148 and 149; Assistant Treasurer’s press release Nos 160 and 162, 29 November 2011