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Date of article: 17 May 2011
Last updated: 17 May 2011

Federal budget 2011 - superannuation specific

Concessional contributions cap

As previously announced the concessional contributions cap for individuals aged 50 and over with total superannuation balances of less than $500,000 will be $25,000 more than the general concessional cap of $25,000. This will apply from 1 July 2012.

The additional $25,000 for eligible individuals aged 50 and over with total superannuation balances of less than $500,000 will not be indexed.

Income year 2011-12
(transitional)
2012-13
General concessional cap $25,000 $25,000
Over 50 concessional cap    

- total superannuation
less than $500,000*

$50,000

$50,000

- total superannuation
$500,000 or more

$50,000

$25,000

*The methodology of applying the total superannuation balances of less than $500,000 is still not determined. Treasury has previously release a discussion paper.

Excess concessional contributions - up to $10,000 refund option

Where an individual has made excess concessional contributions of up to $10,000 and have breached the cap for the first time, the measure will provide the individual with the option to have the excess concessional contributions taken out of their superannuation and taxed at their marginal tax rate.

The measure is not retrospective and will apply from 2011-12 or later years on a once only basis.

This will particularly address situation where a small amount of excess concessional contribution is deemed to also be non-concessional contribution trigerring the 3 year bring-forward non-concessional cap rule to apply.

Minimum account-based pension for 2011-12

The minimum payment amount for account-based, allocated and market linked (term allocated) pensions will be reduced by 25% of the normal amount for 2011-12, and return to normal in 2012-13.

The 2012-12 financial year minimum pension factor:

Age of member Minimum Pension Factor (Ordinary) 2010-11 Minimum Pension Factor 2011-12 Minimum Pension Factor
Under 65 4% 2 % 3 %
65 - 74 5% 2.5 % 3.75 %
75 - 79 6% 3 % 4.5 %
80 - 84 7% 3.5 % 5.25 %
85 - 89 9% 4.5 % 6.75 %
90 - 94 11% 5.5 % 8.25 %
95 and Over 14% 7 % 10.5 %
       

Increase in SMSF levy

The Government will boost funding to the Australian Taxation Office (ATO) to improve the supervision of the SMSF sector. The SMSF levy will increase by $30 from $150 to $180, with effect from 2010-11 income year.

Capital gains tax (CGT) - remove trading stock exception.

This ensures that gains or losses on disposal of assets (primarily shares, units in trust and land) will be subject to CGT. With effect from 10 May 2011, complying superannuation funds will no longer be able to treat shares as trading stock to deduct losses against income.

Accordingly to the ATO, a small number of complying superannuation funds are seeking to treat shares as trading stock, so as to deduct losses on their share against other income. Assets accounted for as trading stock before the announcement are unaffected.

 

Individuals - Minimal impact for individuals

There has been no change to the individual tax thresholds or rates so the 2010-11 tax thresholds and rates will continue to apply from 1 July 2011.

Taxable income range ($) 2011-12 tax rate (%)
0 – 6,000 0
6,001 – 37,000 15 %
37,001 – 80,000 30 %
80,001 – 180,000 37 %
180,000+ 45 %

Note: Excludes 1.5 per cent Medicare Levy.

However, a Temporary Flood and Cyclone Reconstruction Levy will apply to the 2011-12 tax year only. It is designed to assist affected communities recover from the recent natural disasters. The levy of 0.5 per cent will be applied to that part of an individual’s taxable income between $50,000 to $100,000 and 1 per cent to that part of an individual’s taxable income over $100,000.

Car fringe benefits – the current statutory percentage rate for valuing car fringe benefits will be replaced with a single statutory rate of 20% regardless of the number of kilometres travelled, phasing-in over four years. Those who salary sacrifice motor vehicles and drive more than 25,000 kilometres will be worse off. The alternative “operating costs” method will still be available.

The Government also plans to re-introduce its previously defeated legislation seeking to means test the 30% private health insurance rebate.

Small business tax breaks

A number of small business tax breaks has been announced, with most taking effect from 2012-13.

  • Entrepreneurs' Tax Offset will be replaced with an immediate $5,000 write-off of the cost of any motor vehicle purchased by small business from the 2012-13 year. The remainder can be depreciated at 15 per cent in the first year and 30 per cent in subsequent years under the general small business pool.
  • From 2012-13 year, small business can claim an immediate write-off of new business asset worth less than $5,000 (currently $1,000).
  • As previously announced, the company tax rate for small business will reduce to 29 per cent.

 

More information and contacting us

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