A new Government means a new legislative agenda, with possibly more changes in store for your super and your tax. Changes may include cutting some of the former government’s programs, and adding some new ones.
Remember, the proposals outlined below still have to be passed into law. That means there is still room for further changes.
We’ll keep you up -to -date as the situation develops. In the meantime, here’s an overview of the four most important proposed changes and how they could affect you.
1. Superannuation guarantee increases delay
What’s proposed
The former Labor Government planned to increase employer superannuation guarantee contributions by 0.25% a year, from 9% in 2012–13, to 12% per year in 2019–20. But while the Coalition says it will eventually increase contributions to 12%, it plans to freeze them at the current rate of 9.25% for another two financial years.
What could this mean for you?
If you’re an employee, your employer super contributions will stay at 9.25% of your salary for at least another two years. They will eventually increase to 12%, but that is not expected to happen
until 2021–22.
2. Low income super contribution scrapped
What’s proposed
The Coalition has said it will cancel the government funded low income super contribution for workers earning less than $37,000 a year.
What could this mean for you?
If you currently earn less than $37,000 a year, the government tops up your super by paying an amount equal to 15% of your concessional super contributions into your super account, up to $500. This scheme is designed to offset the tax payable on concessional contributions, such as your employer’s super guarantee contributions.
The scrapping of the scheme could mean you end up with up to $500 less in super
each year.
3. Super fund reporting improvements
What’s proposed
The Coalition announced plans to make super funds more competitive by introducing performance benchmarks, including standardised reporting of fees and
investment returns.
What could this mean for you?
The proposal aims to make it easier for you to compare the performance of different super funds and choose the fund and investment option that suits you best. Because funds will report fees and performance in the same way, comparisons between funds should become faster and simpler.
4. Tax changes for business
What’s proposed
The Coalition plans to cut the company tax rate by 1.5% from 1 July 2015 — although, for large companies, this will be offset by a 1.5% levy on taxable income over $5 million to fund the paid parental leave scheme.
As most readers will already know, the Coalition also intends to abolish the carbon tax and the Minerals Resource Rent Tax (MRRT) in its first term. As part of that process, they intend to discontinue or remove a range of recently introduced business tax concessions, including:
What could this mean for you?
Under current rules, businesses can instantly write-off new assets worth up to $6,500, as well as the first $5,000 on the cost of a vehicle.
Companies can also use tax losses from the current financial year to offset tax paid in a previous tax year, potentially giving them a tax offset of up to $300,000.
These concessions are now likely to be removed, while the overall company tax rate is set to fall.
Meanwhile, it remains unclear when each of these changes might take effect. So remember to talk your adviser before making any decisions based on the new or existing rules.
Source: colonialfirststate.com.au
Remember, the proposals outlined below still have to be passed into law. That means there is still room for further changes.
We’ll keep you up -to -date as the situation develops. In the meantime, here’s an overview of the four most important proposed changes and how they could affect you.
1. Superannuation guarantee increases delay
What’s proposed
The former Labor Government planned to increase employer superannuation guarantee contributions by 0.25% a year, from 9% in 2012–13, to 12% per year in 2019–20. But while the Coalition says it will eventually increase contributions to 12%, it plans to freeze them at the current rate of 9.25% for another two financial years.
What could this mean for you?
If you’re an employee, your employer super contributions will stay at 9.25% of your salary for at least another two years. They will eventually increase to 12%, but that is not expected to happen
until 2021–22.
2. Low income super contribution scrapped
What’s proposed
The Coalition has said it will cancel the government funded low income super contribution for workers earning less than $37,000 a year.
What could this mean for you?
If you currently earn less than $37,000 a year, the government tops up your super by paying an amount equal to 15% of your concessional super contributions into your super account, up to $500. This scheme is designed to offset the tax payable on concessional contributions, such as your employer’s super guarantee contributions.
The scrapping of the scheme could mean you end up with up to $500 less in super
each year.
3. Super fund reporting improvements
What’s proposed
The Coalition announced plans to make super funds more competitive by introducing performance benchmarks, including standardised reporting of fees and
investment returns.
What could this mean for you?
The proposal aims to make it easier for you to compare the performance of different super funds and choose the fund and investment option that suits you best. Because funds will report fees and performance in the same way, comparisons between funds should become faster and simpler.
4. Tax changes for business
What’s proposed
The Coalition plans to cut the company tax rate by 1.5% from 1 July 2015 — although, for large companies, this will be offset by a 1.5% levy on taxable income over $5 million to fund the paid parental leave scheme.
As most readers will already know, the Coalition also intends to abolish the carbon tax and the Minerals Resource Rent Tax (MRRT) in its first term. As part of that process, they intend to discontinue or remove a range of recently introduced business tax concessions, including:
- the instant asset write-off concessions
- accelerated depreciation of motor vehicles, and
- the tax-loss carry-back measure.
What could this mean for you?
Under current rules, businesses can instantly write-off new assets worth up to $6,500, as well as the first $5,000 on the cost of a vehicle.
Companies can also use tax losses from the current financial year to offset tax paid in a previous tax year, potentially giving them a tax offset of up to $300,000.
These concessions are now likely to be removed, while the overall company tax rate is set to fall.
Meanwhile, it remains unclear when each of these changes might take effect. So remember to talk your adviser before making any decisions based on the new or existing rules.
Source: colonialfirststate.com.au
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