Superannuation changes confirmed
Deloitte Federal Budget media releaseDOWNLOAD
15 May 2013: Deloitte National Superannuation Leader Russell Mason said that the 2013 Federal Government’s Budget was pleasing insofar as no significant additional changes were announced to the superannuation system, but rather a confirmation of previous announcements including the most recent one made on 5 April 2013.
Mr Mason applauded the government’s confirmation of its announcement to increase the concessional contribution threshold from $25,000 to $35,000 from 1 July 2013 for individuals aged 60 and over, and 1 July 2014 for individuals aged 50 and over. Mr Mason said this would significantly increase the capacity of working Australians to save for retirement.
There is still concern, said Mr Mason, regarding the announcement to introduce a 15% tax on earnings in retirement over $100,000. While there is no argument regarding the equity of this tax, Deloitte’s superannuation team is concerned that the administrative cost in putting systems in place to calculate an individual member’s investment earnings could potentially exceed the revenue raised.
Deloitte was also pleased with the government’s confirmation of its 5 April announcement that deferred annuities will be treated, for tax purposes, in the same way as other superannuation retirement income streams. Encouragement of deferred annuities and income streams in general, is vital to ensuring the sustainability of living standards for Australians in retirement.
Deloitte superannuation actuary, Ben Facer, commented on the announced change to the tax treatment of excess concessional contributions, noting that the taxation of such contributions at a member’s marginal tax rate as opposed to the highest marginal tax rate resulted in much fairer outcomes for affected individuals.
The main thrust of the government’s superannuation announcements in this Budget was to reaffirm the government’s commitment to providing a robust and secure superannuation system. The biggest concern from the announcements is how these changes will be implemented in a cost effective manner, and that they do not potentially confuse and damage the confidence of the average superannuation member.