Labor Reaffirms Further Changes to Superannuation

Last week, Senator Kristina Keneally gave a speech (on behalf of the Shadow Treasurer, Chris Bowen) to the Financial Services Council where she renewed some commitments:

"We oppose the Government's measures to allow catch up concessional contributions and tax deductibility on personal superannuation concessions contributors. We will also lower the annual non-concessional contributions cap to $75,000 and further lower the high income super contribution threshold to $200,000. We believe in increasing the superannuation guarantee to 12% when fiscal circumstances allow, which will greatly assist in maximising people's retirement incomes in the future."

Discretionary Trust and other changes also mentioned in the speech linked below:
https://fsc.org.au/_entity/annotation/744daa0e-ae3b-e811-8136-e0071b686a81

 

How will the $200,000 threshold work?

If my gross salary is $200,000 (incl super) that means gross salary excluding super is $182648.40 at 9.5% super. So super payment would be $17351.60.

If my gross salary is $200,000 (excl super) that means 9.5% on top of it will be $19000 in super.

From what I understand you should be allowed to contribute $25,000 per year into super as concessional contribution and pay 15% tax.

With Labour's proposed changes does that mean I can only contribute $17351.60 or $19000 at 15% tax and any further contribution I need to pay 30% until the $25,000 limit is reached?

Cheers,
Oracle.

 

Div 293, would work the same as now except at a lower threshold.

Division 293 tax - information for individuals

Google Div 293 if you need more info.

 

Disincentivising contributions towards one's retirement ... typical Labor lack of thinking ahead!

Labor obviously thinks that:

1. All battlers are employees
2. Self-employed people should be on the age pension

Employer is only required to contribute 9.5% of income up to $200K ($50K per quarter). These employees can typically salary sacrifice anyway (if they have a "good employer"), so can still take themselves up to $25K.

If you earned $500K then a maximum contributions base of $200K says the employer only has to contribute $19,000 (9.5% of $200K) as SGC.

Whatever your level of income, if you don't have a "good employer" that will allow you to salary sacrifice then Labor says you can't top up to the $25K yourself.

 

My head spins trying to figure out all the terminology used in examples in the above link.

I can salary sacrifice no problems. So will be happy to contribute maximum allowed each year.

Cheers,
Oracle.

 

$25,000 annual contribution is a stupidily low level (IMHO). If you have the capacity to contribute ie no non-deductible debt, low expenses etc it's very easy to over-contribute.

Sure, the $1.6m cap is restrictive but only a small % of superannuants would have this level of super stashed away. Most people don't earn that in 30 years of hard graft.

 

Assuming funds wont be embezzled

My understanding as well.

 

It’s all a bloody shambles. Talking to one of my GMs today about franking refunds (he is ****** off as he has franked divs steamed to stay at home spouse) told him to not burn any energy on this stuff, there is a long way to go and if / when it’s real we will work out how best to handle then. In the meantime, do not vote ALP

 

If your taxable income + super contributions + various other things was more than $250,000, your concessional superannuation contributions are taxed an additional 15%.

Sounds like Labor would like to lower this threshold further to $200,000 (it recently changed from $300,000).

 

That was what I was thinking as well. See my first post above with example. But that means you cannot contribute $25,000 concessional limit at 15% as allowed to everyone else. @qak post later said as long as your employer allows salary sacrifice you can still contribute $25K per annum.

The question is what tax rate do you pay on that $25K? Assuming your total income (incl super and investments and employment) is
1) Greater than $250K
2) Less than $250K

Do they use gross income or taxable income (which is after all deductions)?

Cheers,
Oracle.

 

Anything KK says is rubbish. I will see what an elected govt does

 

Depends. Marginal tax rate vs avg tax rate. Someone with only 25k of income could have a avg tax rate of 5%

 

The ATO has info on this: Division 293 tax - information for individuals

The contributions tax is 15% if your income for Div293 is under $250K; and 30% if over.

 

Not really. FBT. MLS. CGT. PSI. ATI. Private health and loads of issues. Does your spouse work?