Budget Changes for Superannuation

Now this certainly isn’t the sort of topic I normally have on my blog, but it is something of interest to most people in Australia right now – well those who are old enough to work, have wrinkles and worry about spending their golden years penniless and living in a cardboard box. piggy

In light of the recent 2009/2010 Federal Budget delivered by Federal Treasurer Wayne Swan, I thought I’d share this information that I was sent from the BT Financial Group.

It is regarding what the Budget changes to superannuation mean, the various changes proposed to salary sacrificing and Government Co-contribution arrangements and some tips on how you could make the most of the remaining time
until the end of this financial year.


Concessional Contributions (CC) cap reduced

Concessional contributions generally include Superannuation Guarantee (i.e. the money your employer pays into super), salary sacrifice contributions and personal deductible contributions. They’re taxed at a ‘concessional’ rate of 15%.

What’s the change?
Effective 1 July 2009, the concessional contributions cap (CC) will be halved from $50,000 to $25,000 (indexed) per annum.

Things to consider:

Do you have money you want to invest into superannuation this financial year? If so, you could consider maximising super contributions this financial year to fully utilise the current concessional contributions cap of $50,000.

If you make total concessional contributions of more than $50,000 per year, you may need to reduce your salary sacrifice (or personal deductible contributions from 1 July 2009 to ensure you don’t inadvertently breach the new contributions cap).

If you’re not currently making additional contributions to superannuation (i.e. in addition to SG), the ability to make large ‘last minute’ concessional contributions will be diminished from 1 July 2009. One idea post 1 July 2009 is to start a regular savings plan into super to ensure adequate retirement savings are accumulated.

Maximum Government Co-contribution reduced

Depending on what you’re earning and subject to certain eligibility criteria, the Government currently kicks in $1.50 for every $1.00 you make in personal non-concessional contributions for which you have not claimed a tax deduction, up to a maximum of $1,500.

What’s the change?
A temporary reduction of the maximum Government co-contribution from $1,500pa to $1,000pa has been announced. This will apply to eligible personal superannuation contributions made on or after 1 July 2009.

Things to consider:
If you qualify for the Government Co-contribution, this will be the last year for three years that you will receive $1.50 from the Government for every $1.00 you put into your super. That’s a 150% return! So if you have some spare cash, it may be worth considering.


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