4 May 2010 | What the Henry Review means for you
The Government’s response to the Henry Tax Review – the Review into Australia’s Future Tax System – has provided good news for super fund members.
All of the changes proposed are positive and will not disadvantage any fund members.
Key measures to be introduced by the Government are:
- The Superannuation Guarantee (SG) rate is to be gradually increased from 9% to 12%.
- You can continue to receive employer SG contributions until you turn 75.
- Low income earners will receive a Government contribution of up to $500 annually.
- People 50 or over with an account balance less than $500,000 can contribute up to $50,000 a year.
Importantly there has been no change to the tax rates that apply to super contributions, benefits or fund income. So you won’t be taxed more when you contribute and you won’t pay tax on your benefits when you’re over 60.
More detail on each of the superannuation specific measures is set out below:
Increasing the superannuation guarantee rate from 9 to 12 percent
From 2013-14, there will be a phased increase of the SG rate from 9% to 12%. The seven year lead-time and phase-in will allow employers and unions to take the increased SG contributions into account when negotiating future wage settlements.
The rate will be increased as follows:
| Year |
Rate (%) |
| 2013-14 |
9.25 |
| 2014-15 |
9.5 |
| 2015-16 |
10 |
| 2016-17 |
10.5 |
| 2017-18 |
11 |
| 2018-19 |
11.5 |
| 2019-20 |
12 |
Increasing the SG age limit from 70 to 75
From 1 July 2013 the age at which employees are entitled to an employer SG contribution will be increased from 70 to 75. This means you will be able to receive SG contributions for longer if you remain in the workforce.
The work test for contributions by persons over the age of 65 has been retained.
Low income earners government superannuation contribution
If you earn less than $37,000, the Government will make a superannuation contribution of up to $500 annually directly into your superannuation account.
This $500 more or less equals any contributions tax you have paid on your super contributions. By doing this the Government is aiming to make the superannuation contributions tax fairer for low income earners. It is anticipated that 3.5 million individuals will benefit from this change.
The measure will apply with respect to concessional superannuation contributions made from 2012-13. The first amounts will be paid in 2013-14.
Extending the concessional contributions cap for persons over the age of 50
From 30 June 2012, the transitional contributions cap measure for persons aged over 50 will be replaced with a new measure. Persons over age 50 and with a total superannuation balance of less than $500,000 will have a separate higher concessional contributions cap of $50,000 (indexed).
This will allow an estimated 275,000 individuals with low superannuation balances the opportunity to ‘catch up’ on their super contributions at the stage in their lives when they are most able to do so. It will particularly benefit those who have had periods outside the workforce.
More information
For more information on the new tax plan, check out the Government’s official website.