Mid-year Budget update
There were several announcements that affect superannuation in the mid-year economic budget update (29 Nov). The good news is the so-called ‘no doc’ delivery of the superannuation rebate for low-income earners.
The Low-Income Superannuation Contribution (LISC – because it has to have an acronym!) is effectively a rebate on the tax paid on super contributions for people earning less than $37,000 a year.
The previously announced rebate would have required those individuals to lodge a tax return in order to qualify. However, this would have conflicted with plans to lift the tax-free threshold to $18,200 from 1 July 2012 thereby exempting around one million low-income earners from having to complete a tax return.
Instead, it was announced in the mid-year Budget update that the Australian Taxation Office (ATO) will auto-assess the entitlement of low-income earners, meaning they won’t have to do anything to have the tax credited back to their superannuation account. This will take effect from 1 July 2012.
Unfortunately, in a tough budgetary environment, the new concession had to be offset with savings elsewhere. And so the Government has announced it is scaling back the superannuation co-contribution as of July next year. Both the matching rate and the maximum payment of the co-contribution have been reduced.
The mid-year Budget update also included a decision to delay for another year (until 2014-15), the increase in the superannuation contribution cap for those aged under-50. It had been scheduled to increase from $25,000 to $30,000 at the start of the 2013/2014 financial year. The increase to $30,000 will now start in the 2014/2015 financial year.
Finally, in good news for mature workers, the age limit for receiving superannuation contributions has been abolished. From 1 July 2013, those aged 70 and over will be able to receive the superannuation guarantee for the first time.
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