SMALL businesses in Redland City were given an in-depth rundown on how changes in this year’s federal budget will affect their superannuation plans.
Suncorp Superannuation Business Development Manager Sean Cogman explained the new employers’ obligations, including some of the legislation changes, which will come into effect on July 1.
Mr Cogman and his Suncorp financial planner Troy Uhlmann also explained how self-funded retirees could hold superannuation balances of up to $1.6million and not pay tax on any of the fund’s earnings.
He said the finance industry was prepared for the changes made in this month’s federal budget as laws surrounding super funds had been “very very generous for a long time”.
“Probably the part of the budget that concerns most is the retrospective changes to the laws, which are still just proposed changes, which Labor will oppose if they get into power.” he said.
“The concessional cap has been reduced to $25,000 down from $100,000 not so long ago.
“Probably the most important message with the cap is that we need to plan earlier and not leave it to the last few years before we retire."
Under the changes, due to be introduced in July 2017, the capped $25,000 in contributions includes salary sacrifice, superannuation guarantee payments and any employer contributions.
Restrictions will also be relaxed for those under 75 to claim tax deductions for personal contributions to eligible superannuation funds up to $25,000.
Unused concessional caps will be able to be carried forward to allow individuals with superannuation balances below $500,000 to make “catch-up” superannuation contributions, and extend the eligibility for individuals to claim a tax offset for contributions made to their low-income spouse’s superannuation.
Mr Cogman said people who still had lots of little super funds needed to consolidate them to cut down on administration charges.
He said the superannuation levy of 9.5 per cent was cumbersome but generous even though most people did not pay adequate attention to their annual contributions.
Employees were also warned to check on contributions on a quarterly basis and told employers they were liable for payments until the money reached the employee’s fund.
“Lost super has dropped from $18billion to $13billion and we expect to see this continue to go down. One thing the government has mandated is the need to file your tax file number with the fund, making rolling into and out of funds easier,” he said.
“...We all need to pay ASG, or Australian Superannuation Guarantee, quarterly. Anyone earning more than $450 in a calendar month has to pay this to a complaint fund.”
Although the numbers at the meeting were down on pre-council election meetings, Bowman MP Andrew Laming and his opponent ALP’s Kim Richards attended.
Mr Laming said the government announced the reforms to improve the sustainability, flexibility and integrity of the superannuation system.
He said the big changes affecting the wealthy were the $25,000 annual cap on concessional contributions; a $500,000 lifetime cap on non-concessional contributions; a 30per cent tax rate on superannuation contributions for individuals with an income (including super) of above $250,000; and the $1.6million limit on amounts moving into the tax-free retirement phase.
Ms Richards said Labor was concerned about the retrospective elements of the super policy and hoped the changes did not dent confidence.
Bowman Greens candidate Brad Scott said some of the changes to superannuation were welcome but the Budget represented a missed opportunity.
“Someone earning $250,000 continues to pay the same 15 per cent tax rate on their contributions as someone earning $60,000,” Mr Scott said.
“That’s not fair yet both of the old parties continue to support it. Truly reforming our super system could bring in four times as much revenue for schools and hospitals, make the system fairer for women, and help super work in the way it was intended.”
