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TAX ALERT – JULY 2013

Superannuation Concessional Contributions Limit 2013-2014

Last night, Federal Parliament passed laws that grant an increase to the superannuation concessional contributions limit to $35,000 for 2013-2014 for employees who are aged 60 or over at the end of the income year (ie. by 30 June 2014).  

The concessional contribution limit remains at $25,000 for all other employees (ie. those under 60 years of age by 30 June 2014).

It is also important to note that from 1 July 2014 (for the 2014-2015 tax year), the $35,000 limit will become available to employees aged 50 or over at the end of the income year (ie by 30 June 2015).

Superannuation and High Income Individuals

Also passed into law last night, Federal Parliament approved amendments that will result in high income individuals (ie. individuals whose income, reportable fringe benefits and superannuation contributions exceed $300,000 in total) having the superannuation component of their income taxed at 30% instead of 15%.

Example

An employee has taxable income of $280,000 and superannuation contributions of $25,000. The employee's total income is therefore $305,000, which is in excess of the $300,000 threshold.

The first $20,000 of the superannuation amount will be taxed at 15% and the excess of $5,000 taxed at 30%.  The higher tax rate is applicable only where the taxable income plus superannuation exceeds $300,000.

Unlike the change in the superannuation concessional contributions limit above, this change is applied retrospectively to commence from 1 July 2012, and therefore it will be assessed on income and contributions for the year ended 30 June 2013.  

It should be carefully noted that there are no obligations placed on employers in this area, rather all affected employees should consider the implications to their circumstances, and we recommend you contact your Lowe Lippmann advisor for assistance.

Please do not hesitate to contact your Lowe Lippmann advisor if you wish to discuss any of these matters further.