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Date of article: 22 May 2012
Last updated: 23 May 2012

Federal budget 2012-13

Despite public pressure to maintain status quo, the Government continues to tinker with the superannuation system. The changes and added complexity will cause likely lead to some confusion.

Additional tax on concessional contributions for high income earners

An additional tax of 15% on concessional superannuation contributions will apply from 1 July 2012 for individuals whose adjusted income exceeds $300,000 – making the effective rate of tax 30%, i.e. the tax on $25,000 concessional superannuation contribution will be $7,500.

The definition of income for this purpose is taxable income, concessional superannuation contributions, adjusted fringe benefits, total net investment loss, target foreign income, tax-free government pensions and benefits, less child support.

The appropriate mechanism for the collection of the additional tax is subject to further industry consultation. Whatever the method, the additional administrative burden will lead to higher cost of reporting.

Deferral of higher concessional contributions cap for over 50s

The previously announced policy of continuing with a higher concessional contributions cap of $50,000 for individuals aged 50 and over, with superannuation balance not exceeding $500,000 has been deferred for 2 years to 1 July 2014.

The concessional contribution cap for individuals aged 50 and over will reduce to $25,000 from 1 July 2012.


Year Under age 50 Age 50 and over
1 July 2011 – 30 June 2012 $25,000 $50,000
1 July 2012 – 30 June 2013 $25,000 $25,000
1 July 2013 – 30 June 2014 $25,000 $25,000

It is envisaged that more and more individuals will inadvertently breach their caps and experience the costly excess contributions tax regime.

Drawdown relief for superannuation pension extended

The Government confirmed that the 2012-13 minimum superannuation pension drawdown will continue at a 25% discount with normal levels from 1 July 2013.


Age on 1 July 2012-13 From 1 July 2013
Under age 65 3% 4%
Age 65 – 74 3.75% 5%
Age 75 – 79 4.5% 6%
Age 80 – 84 5.25% 7%
Age 85 – 89 6.75% 9%
Age 90 – 94 8.25% 11%
Age 95 or older 10.5% 14%

Low income superannuation contribution

As previously announced, the introduction of Low Income Superannuation Contribution will provide a superannuation contribution of up to $500 annually for individual with adjusted taxable income up to $37,000 where at least 10% of their total income was sourced from employment, to partially offset tax on their superannuation guarantee contributions.

The amount payable will be calculated by applying 15% to the total concessional contributions made by or for the individual up to an annual maximum of $500.

Changes to personal income tax rate (Australian resident)

The 2012-13 change to personal income tax rate is modest and focuses on the lower income earners. The increase in the tax-free threshold claws back some low income tax offset.


Taxable income Tax rate 2011-12 Tax rate 2012-13
0 – $6,000 Nil Nil
$6,001 – $18,201 15c for each $1 over $6,000 – $37,000 Nil
$18,201 – $37,000 19c for each $1 over $18,200
$37,001 – $80,000 $4,650 plus 30c for each $1 over $37,000 $3,572 plus 32.5c for each $1 over $37,000
$80,001 – $180,000 $17,550 plus 37c for each $1 over $80,000 $17,547 plus 37c for each $1 over $80,000
$180,001 and over $54,550 plus 45c for each $1 over $180,000 $54,547 plus 45c for each $1 over $180,000

Effective tax payable allowing for low income tax offset:


Taxable income 2011-12 2012-13
18,000 Nil Nil
35,000 $3,050 $2,747
50,000 $7,850 $7,547
75,000 $16,050 $15,992
100,000 $24,950 $24,947
150,000 $43,450 $43,447

The above tax tables excludes Medicare levy and additional Flood levy for 2012.

 

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