A very brief summary of items in last week’s Australian budget that affect self managed superannuation funds:
The major revenue measures concerning superannuation proposed in the Budget included:
- Excess contributions tax: The Government will
provide eligible individuals who breach the concessional contributions cap by
up to $10,000 with a one-off option to request that these excess contributions
be refunded to them. This new refund option will only apply to first time
breaches from 1 July 2011.
- Minimum pension drawdowns: The minimum annual
payment amounts for pensions and annuities will be reduced by 25% for 2011-12
and will return to normal in 2012-13. In this respect, the Government will
begin to phase out the 50% pension drawdown relief that has been provided for
2008-09, 2009-10 and 2010-11 financial years.
- SMSF regulation: To implement the range of
“Stronger Super” reforms to the self-managed superannuation fund (SMSF)
sector, the Government will provide $40.2m to the Tax Office and $8.4m to ASIC
from 2010-11 to 2014-15. The cost of this measure will be offset by an
increase to the SMSF levy from $150 to $180 with effect from the 2010-11
income year and the introduction of SMSF auditor registration fees from 1 July
- Concessional contributions for those 50 and over:
The Government will set the proposed higher concessional contributions
cap at $25,000 above the general concessional cap for eligible individuals
aged 50 and over with total superannuation balances of less than $500,000.
- Other measures: Other superannuation measures
announced concerned: SMSF trustee-director a parent or guardian of minor;
superannuation co-contribution indexation freeze extended; greater use of TFNs
for superannuation; and superannuation on payslips.
And finally, the annual fees for having your own fund , the supervisory levy, will increase from $150 to $180
The Federal Government has released a $10.4 billion Economic Security Strategy to strengthen the Australian economy. The package contains the following key measures:
- Ã‚Â· $4.8 billion in new support for pensioners and carers, including a lump sum payment of $1400 to single pensioners and $2100 to pensioner couples. People who are receiving carer allowance will also receive $1000 for each eligible person in their care. These payments will be made from Monday 8 December and are intended to provide additional support in the nine months between now and when long-term reforms are introduced from the beginning of the next financial year.
- Ã‚Â·Self-funded retirees who are eligible for a Seniors Concession Allowance or hold a Commonwealth Seniors Health Card will also receive a payment of $1400 for singles or $2100 for couples.
- Ã‚Â· $3.9 billion in support payments for low and middle income earners through a one-off payment of $1000 for each eligible child in their care. These payments will be made from Monday 8 December.
- Ã‚Â· $1.5 billion for first home buyers under a newly announced First Home Owners Boost with effect from Tuesday 14 October – all contracts entered into by 30 June 2009 will be eligible for this new additional assistance:
- first home buyers who purchase established homes will receive the grant, which they are currently entitled to doubled from $7000 to $14,000
- first home buyers who purchase a newly-constructed home will receive an extra $14,000 to take their total grant to $21,000
The government claims that this $10.4 billion strategy will be entirely funded from the budget.Ã‚Â Treasury advises that the Budget will be in surplus after these measures.
In an interview on ABC Radio National, the treasurer has indicated that the government intends to close what he calls a tax loophole concerning the use of executive share option schemes. Mr Swan said there has been a loophole in the system ‘where those with the shares who are predominately higher income earners and people who’ve accumulated shares or rights through their company, have been able to avoid paying their fair share of tax’.
It is estimated that $77 million in tax is avoided annually through this “loophole”.