Superannuation Update 2012/13

Contributions The contributions caps for the year ending 30 June 2013 are: $25,000 Concessional Contributions Cap for ALL taxpayers (regardless of age) $150,000 Non-Concessional Contributions Cap for all taxpayers or up to $450,000 for taxpayers under 65 years of age, over a 3 year period We remind you that the Concessional Contributions Cap includes all contributions that have been claimed by a taxpayer or their employer. Are you aged 50 years or more? If you are aged over 50 you must ensure that your concessional contributions are scaled back to $25,000 per year from 01/07/2012. Please ensure any salary sacrifice arrangements are reviewed as soon as possible. Previously, the Government proposed that for 2012/13 and following financial years, super investors aged 50 or more would be entitled to a concessional contributions cap of $50,000 per year, if they had a super balance under $500,000. However, this measure has been deferred until at least 1 July 2014. $300,000 Individuals with total income > $300,000 As announced in the 2012 Budget, individuals who earn more than $300,000 per year (includes taxable income, concessional super contributions, fringe benefits and other prescribed amounts) will incur an additional 15% on their super contributions over and above the 15% base contributions tax. Excess Contributions Tax (ECT) If either of the contribution caps are exceeded, an ECT Assessment will be triggered and assessed to the individual. Excess concessional contributions attract a further 31.5% tax (on top of the 15% paid by the Fund) and can either be paid by the individual or super fund. Excess non-concessional contributions will attract tax at the rate of 46.5% and must be paid by the super fund. For concessional contributions after 1 July 2011 that breach the cap by up to $10,000, individuals may request these contributions be refunded and taxed at their marginal tax rate. This is a once only opportunity from the Taxation Office and wont be offered again for subsequent breaches. Work Test for over 65s for In order to be able to continue to contribute to super (both concessional and non-concessional) you must be able to satisfy a work test. This is defined as gainfully employed for at least 40 hours in a 30 day period. Gainfully employed means self employed or employed for gain or reward. (eg. Wages, commissions, business income). Volunteer work does not count for the purposes of this test. Over 75s are only able to contribute to super in very limited circumstances. drawdown relief Minimum pension drawdown relief continues for 2012/13 2012/13 The Government has announced that the current 25% concession will be remain in force for the 2012/13 financial year. The minimum amounts payable depend on the age of the pension recipient illustrated in the table below: Age of member Under age 65 65 to 74 75 to 79 80 to 84 Reduced Rate 3% 3.75% 4.5% 5.25% Standard Rate 4% 5% 6% 7%

It is expected that the minimum pension drawdown will revert to the Standard Rates above from 1 July 2013. Benefit Death Benefit Nominations Superannuation benefits do not automatically form part of your estate. In the absence of a specific clause in the Super Fund Trust Deed or a binding nomination, the decision regarding what happens with your super is left to the discretion of the Trustee. Life events such as marriage and divorce can make a nomination invalid. Equally as important is the need to consider who will step in as trustee when you die. These issues are best dealt with by a legal professional preferably one who is familiar with your Will.

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Superannuation Update 2012/13

Other changes worth highlighting The SMSF Supervisory Levy has increased from $180 to $200 for the 2012 year only. This is levied when the SMSF Annual Return is lodged. For the 2013 year onwards, the amount will revert to $191. Off Market Transfers of listed securities are still permitted until 30 June 2013. An Administrative Penalties regime for breaches of superannuation legislation by SMSF trustees and directors of trustee companies has been introduced. The penalty cannot be paid or reimbursed by the fund. The size of the penalty depends on the seriousness of the contravention. The Superannuation Guarantee (SG) rate will be increased to 12% starting from 1 July 2013. The table below indicates the timeline for changes to the rates:
Year 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 Rate 9.25% 9.5% 10% 10.5% 11% 11.5% 12%

Did you know that??

SMSFs make up 30.3% of the total superannuation assets in Australia

SMSFs Retail Industry Govt Other

Proportion of Superannuation Assets by Fund Type

SOURCE: APRA QUARTERLY SUPERANNUATION PERFORMANCE (MARCH 2012)

The Tax Free Threshold for individuals has increased from $6,000 to $18,200 from 1 July 2012. A Low Income Super Contribution (LISC) of up to $500 per financial year has been introduced to help low income earners save for their retirement. If you are eligible, the Government will pay an additional contribution to your super fund to compensate for the 15% tax paid on contributions. In the 2012 Budget, the Government announced reductions to the Super Co-contribution as follows:
Year Max entitlement Matching Matching Rate Lower threshold Higher threshold

If you would like further superannuation information or assistance, please contact our Superannuation Division. Our contact details are as follows: Bentleys (SA) Pty Ltd 64 Greenhill Road WAYVILLE SA 5034 P (08) 8373 1266 F (08) 8373 0228 admin@adel.bentleys.com.au

2011/12 2012/13

$1,000 $500

100% 50%

$31,920 $31,920

$61,920 $46,920

This is not advice. Clients should not act solely on the basis of the material contained in this Bulletin. Items herein are general comments only and do not constitute or convey advice perse. Also changes in legislation may occur quickly. We therefore recommend that our formal advice be sought before acting in any of the areas. The Bulletin is issued as a helpful guide to clients and for their private information. Therefore it should be regarded as confidential and not be made available to any person without our prior approval. Newsletter written by Shari Neagle of Bentleys (SA) Pty Ltd. A member of Bentleys, an association of independent accounting firms in Australia. The member firms of the Bentleys association are affiliated only and not in partnership.