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Date of article: 15 May 2015
Last updated: 15 May 2015

Federal Budget 2015-16

Billed as the Budget for Jobs, Growth and Opportunity, the Federal Treasurer delivered his second Budget with no new taxes on superannuation. However, there are some changes made to the Age Pension.

Superannuation

After widespread speculation about superannuation tax concessions being targeted, superannuation was a non-event and barely made a mention in the Treasurer's Budget Speech. The Treasurer reiterated that "There will be no new taxes on superannuation under this Government."

Basically, there is no change to preservation age, no change to taxation of superannuation, no change to exempt pension income.

There is no change to SMSFs and borrowing under limited recourse arrangement.

However, behind the scene is the Government's Tax Reform White Paper process, which will deal with big ticket reform items for tax and superannuation.

Early release of superannuation for terminal illness

From 1 July 2015, people with terminal illness who are likely to die within two years may gain unrestricted tax free access to their superannuation balance.

Contributions cap to remain the same

There is no change to the contributions cap from the prior year.


Type of contributions General cap Cap for person 50 years of age and over on 1 July 2015
Concessional contributions $30,000 $35,000
Non-concessional contributions $180,000 $180,000

* The contributions cap has remained at this level commencing from 1 July 2014.

Minimum pension drawdown factor to remain the same

There is no change to the minimum pension drawndown factor.


Age on 1 July Minimum pension factor from 1 July 2015
Under age 65 4%
Age 65 – 74 5%
Age 75 – 79 6%
Age 80 – 84 7%
Age 85 – 89 9%
Age 90 – 94 11%
Age 95 or older 14%

Age pension

From 1 January 2017, the Assets Test thresholds will increase and tapering rate at which pensions are reduced once the threshold is exceeded will also be accelerated.

This means that those with moderate asset holdings will receive more pension, and those with more asset holdings will receive less pension.

Proposed change to the Assets Test thresholds for full pension:


Circumstances Current (March 2015), full pension assets must be less than Proposed 1 July 2017, full pension assets must be less than
Single, homeowner $202,000 $250,000
Single, non-homeowner $348,500 $450,000
Couple combined, homeowner $286,500 $375,000
Couple combined, non-homeowner $433,000 $575,000

For part pension, the asset test taper rate will increase from $1.50 to $3. This means for every $1,000 of assets over the asset free threshold, the pension rate will reduce by $3 a fortnight.


Circumstances Current (March 2015), part pension assets must be less than Proposed 1 July 2017, part pension assets must be less than
Single, homeowner $775,000 $547,000
Single, non-homeowner $922,000 $747,000
Couple combined, homeowner $1,151,500 $823,000
Couple combined, non-homeowner $1,298,000 $1,023,000

Those who no longer receive a pension will remain eligible for a Commonwealth Senior Health Card or Health Care Card. No further details were provided on this aspect.

 

Do you need help with your situation or if you wish to discuss the above, please contact us. Our contact details.