New superannuation rules increasing taxes for the wealthy and reducing tax for those on lower incomes have been confirmed in the federal government’s budget.
There will be a new 15 per cent tax on super fund earnings above $100,000 per year from July 1, 2014, the first time a tax has been introduced on superannuation earnings.
Australians with superannuation income above $300,000 will also have with their tax concession halved to 15 per cent.
The tax-free threshold on superannuation contributions has been increased to $35,000 from $25,000, but only for Australians aged above 60 from July 2013, and for those aged above 50 from July 2014.
No mention was made of previously announced plans to make the levy available to all fund members whatever their age from 2018.
For low-income earners, those who earn up to $37,000 a year will effectively pay no tax on super, thanks to a tax cut of up to $500.
As previously announced, all 8.4 million working Australians will have 9.25 per cent of their income paid into super from July 2013, and that guaranteed rate will rise to 12 per cent by 2019.
The Australian Institute of Superannuation Trustees (AIST) said the budget contained no surprises for superannuation and should provide stability for all Australians saving for their retirement.
“Confidence in our superannuation system is critical,” AIST chief executive Tom Garcia said.
“While this budget confirms the super policy changes announced in April, these measures are relatively minor and provide some certainty for people wanting to plan for their retirement.
“On balance, there are more winners than losers,” he said.
Meanwhile, the Institute of Public Accountants (IPA) accused the government of providing a “mishmash” of reforms in place of a long term policy platform.
“While the budget made some good announcements for the superannuation sector these have been tempered by other negative announcements,” the IPA said in a statement.
“While increases in the Superannuation Guarantee are welcomed, the funding for this needs to be considered and we need to recognise this will not be sufficient to address Australia’s ageing population in the long term, with more Australians going into retirement.”