To help you keep abreast with the latest changes, we have compiled a guide to which reforms did and did not make it as of July 1, 2013 – including ones that affect self-managed superannuation funds (SMSFs).

What made it?

1) SMSF supervisory levy rise

The supervisory levy increased from $191 in 2012-13 to $259 in 2013-14 and subsequent years. The higher levy will be collected in the year of income.

2) Increase in superannuation guarantee (SG)

As most of you would have heard by now, employers have to pay more into employees’ super accounts after the SG rate increased from 9% to 9.25% for 2013-14 and will continue to incrementally increase up to 12% by 2019-20.

For employees who are paid at a rate set by an industrial award and employees who have their pay set by a collective agreement, employers are not allowed to reduce their wages to offset the SG increase. However, employees whose wages are not set by an award or a collective agreement may see their take-home pay affected.

If an employee’s contract of employment is a salary package deal (that is, a salary plus superannuation), employers may be able to reduce the take-home salary by 0.25% to keep with the agreement to pay no more than the total package.

As all political parties have agreed to subsequent SG rises in the future – albeit at different times – businesses will not know for certain when the next increase to the SG will be until after the federal election.

3) SG age limit abolished

The maximum age limit for paying superannuation for an employee was removed – meaning that if you employ a worker over 70 years old, it is now compulsory to pay them SG if they earn more than $450 a month.

4) Changes to concessional contributions caps and excess contributions tax

From July 1, there was an increase in the concessional contributions cap from $25,000 to $35,000 for people aged 60 and over. From 2014-15, people who are 50 and over will also benefit from the higher cap of $35,000.

Also from July 1, if you go over your concessional contributions cap, the excess will be taxed at your personal tax rate plus interest – instead of at the highest tax rate of 46.5%.

Additionally, you have the choice of paying the excess contributions tax personally through your superannuation fund, or refunding any amount of excess concessional contributions from your fund. An interest rate charge will apply to this refund, calculated back to the start of the financial year.

5) Top earners to have reduced concessions

Backdated to July 1, 2012, this legislation only recently passed Parliament. Under this measure, individuals earning an adjusted taxable income (consult this office for details and for what makes up your adjusted taxable income) of more than $300,000 will have their contributions tax rate doubled from the flat rate of 15% to 30% (excluding Medicare levy).

6) Government co-contributions diminishes

Backdated to July 1, 2012, the higher income threshold against which co-contributions are assessed has been reduced from $61,920 to $46,920 and the maximum co-contribution matching rate is reduced from 100% to 50% for contributions up to $1,000.

7) Low income super contributions (LISC) – tax rebate for low-income earners

From July 1, 2012 onwards, employed individuals on taxable incomes of less than $37,000 became eligible for a government contribution paid directly to their super account once they lodge their tax return. The contribution matches 15% of total concessional contributions made by or on behalf of the individual up to a maximum of $500. This year however, the government amended the eligibility criteria for LISC in the 2013-14 Budget to now pay individuals with an entitlement below $20. Previously, the LISC was not paid if it would end up being less than $20.

8) A new type of super account for people who do not choose a super fund

From July 1, certain funds will start offering MySuper accounts, which are accounts that have:

• simple features
• basic, comparable fees and restrictions on the type of fees you can be charged
• a single investment option, or investment options based on the life stage you are at, and
• a minimum level of insurance – basic death and total and permanent disablement insurance cover.

If individuals have not nominated a superannuation fund and have just gone with a default fund, their future SG contributions will automatically be paid into a MySuper account from January 1, 2014. Conversely, if they have nominated a superannuation fund, they will not be affected by the MySuper change.

People who want their superannuation more tailored to their needs should seek appropriate advice.

9) New ways to keep track of your super

From July 1, it is much easier to find your lost superannuation and consolidate your various superannuation account balances into one account. You can check to see if you have any “lost superannuation” by entering your name, date of birth and tax file number on SuperSeeker.

You can also use SuperSeeker to claim small amounts of lost super from the ATO, which manages money collected from superannuation accounts that have not received any contributions for a period of two years.

From July 1, the ATO will also pay interest on small amounts of lost superannuation at a rate equivalent to the consumer price index (CPI).

What didn’t make it?

1) New penalty regime for SMSFs

A new range of penalties that would have allowed the ATO to issue rectification and education directions as well as administrative penalties was not introduced as intended from July 1, 2013.

2) Anti-money laundering and counter-terrorism financing regime

Part of the same bill as the penalty regime, these measures would have increased the regulatory obligations for superannuation funds that roll over to SMSFs.

3) Non-complying tax rate for early release benefits

Also part of the same bill, these measures would have effectively taxed illegal withdrawals of preserved benefits at 46.5% instead of an individual’s marginal tax rate.

4) Prohibition on SMSF in-specie asset contributions

After the industry’s adverse reaction to the proposal to ban in-specie asset transfers, the government backflipped and quietly removed the proposed amendments from legislation so that it passed Parliament (read more in our July newsletter).

5) Regulations on taxing pensions earning over $100,000 per individual

The latest inaction is the third time Treasury has considered such a measure to “cap” the tax concessions available to members with larger superannuation balances.