2011 Federal Budget
... what it means for you and your super savings
Last night the Federal Government handed down its 2011 Federal Budget. Not surprisingly, given the changes to super the government’s already announced over the past year or so, there were only a small number of announcements that may affect your super and pension savings.
We've listed these changes below. Keep in mind that the changes are only proposals and will not take effect until they are passed by parliament.
There were four changes to super announced in the budget that you need to be aware of.
1. You can ask for a refund of contributions you make to your super above the government’s contribution caps
- The government has limits, called ‘contribution caps’, on how much you can contribute into super at the low 15% rate of tax. If you exceed these limits you’ll pay extra tax.
- Some good news in the budget is that from 1 July 2011, if the amount of before-tax money you contribute into super (called ‘concessional contributions’) is above this limit, you can ask for a one-off refund of up to $10,000. The change will give people who accidentally pay ‘excess contributions’ the chance to have the refunded contributions assessed at their marginal tax rate, rather than the excess concessional contributions tax rate of 31.5% (in addition to the normal 15% tax).
2. The maximum amount you can earn to get the government’s co-contribution will not increase
- The government has a scheme to help people on low and middle incomes save for their retirement. If you’re a low or middle income earner, the government will contribute extra money to your account, called a ‘co-contribution’, if you contribute your own money after tax and meet certain rules.
- The government has again frozen the maximum annual income you can earn to be eligible for a co-contribution at $61,920 until 30 June 2013. The government co-contribution is up to $1,000 for people with incomes of up to $31,920, with the amount available phasing down for incomes up to $61,920. Previously, both these would have increased by the annual increase in average wages.
3. The halving of minimum annual payment amounts from pensions is phasing out
- For the past three financial years, the minimum annual payment amount you had to take from your pension was halved. These reduced payment amounts were intended only as a short term measure to help people recoup losses caused by the global financial crisis.
- For the 2011-12 financial year this reduction will only be 25% and return to normal on 1 July 2012. This means your pension payments will return to normal on 1 July 2012.
4. Super funds can use TFNs to locate people’s super and consolidate their accounts
- The government will allow super funds, like AUSCOAL Super, to use people’s Tax File Numbers (TFNs) to locate their super and consolidate their super accounts. If you're effected, it may help you save fees and reduce paperwork.
- This means we can use your TFN to find your super from 1 July 2011 and help you consolidate your super accounts from 1 January 2012.
More information
- For consolidated budget coverage and opinion from leading commentators, see our live newsfeed at www.auscoalsuper.com.au
- For more information about the government’s other announcements such as the MySuper product and the proposed increase in the compulsory amount your employer has to pay into your super, read our member newsletter AUSCOAL Extra and our budget announcement last year.
Are you paying too much tax?
- With only seven weeks to the end of the financial year, now’s the time to think about end-of-financial year strategies to save tax and boost your super.
- AUSCOAL Advisory Services advisers are available over the phone or face to face. They’re able to advise you on things such as the government co-contribution and possible tax saving strategies like salary sacrificing into super, contributing to your spouse's super and, for over 55s, ways you can tax-effectively boost your retirement income.
- As an AUSCOAL Super member, advice on making contributions to super is free, while retirement advice starts from just $110 (including GST).
- We can give you a quick answer over the phone to any simple super question or for a more detailed answer on retirement, you can make a face to face appointment. Simply call 1300 AUSCOAL (1300 287 262) Monday to Friday 8am to 6pm. We're here to help.
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