Federal Budget changes to superannuation 2012

Superannuation guarantee increase confirmed from 1 July 2013

The Governments previous announcement to progressively increase the superannuation guarantee rate to 12% was confirmed in the budget. The increase is due to start from 1 July 2013, starting at 9.5% and progresses to 12% from 1 July 2019.

2 year deferral of reduced Concessional contributions for people aged 50+

Annual concessional taxed super contributions are generally limited to $25,000 pa for the 2013 and 2014 years. However, if you are aged over 50 years and have a superannuation fund balance of less than $500,000, then you can still contribute up to $50,000 for the next two years.

Increase in the Contribution rate to 30% in some cases

Individuals with a pre- tax income in excess of $300,000pa including concessional superannuation contributions and certain other adjustments, will have their tax deductible concessional contributions tax rate increased to 30% , effectively doubling the rate from 15% to 30%.

Therefore if a person’s pre-tax income in excess of $300,000, then all of the superannuation contributions will be taxed at 30%.

If the pre-tax income adds to $290,000 and the superannuation contributions are $25,000 then the first $10,000 of contributions will be taxed at 15% while the remainder of $15,000 will be taxed at 30%.

It is not clear yet whether the tax will be collected in the taxpayer’s hands with an adjustment upon lodgement of their income tax return or via the super fund – either way sounds like a logistical nightmare to me.

Low Income Superannuation Contribution

From 1 July 2012 individuals on adjusted taxable income of up to $37,000 will have a 15% matching rate applied to concessional contributions up to a maximum annual amount of $500.  This is, to ensure that they effectively pay no tax on their superannuation guarantee contributions.

Refund of excess concessional contributions

The Budget announced that individuals will now have the option of a refund up to $10,000 of any excess concessional superannuation contributions, made by them or on their behalf in any particular year. Where this choice is made, the amount refunded will be assessed as income to the individual at their marginal rate of tax, rather than incurring excess contributions tax. However, the choice will only be available for breaches in respect of the 2011/12 year or later years, and only for the first year a breach of the contribution caps occurs. 

This measure will provide relief from excess contributions tax in many situations if you have inadvertently contributed more than the contribution caps. However, caution should still be exercised, as the buffer of $10,000 is not particularly large. Further, the measure does not appear to provide any targeted relief for those who have compulsory SG contributions made on their behalf by two or more employers (ie where the total SG contributions from both employers exceed the caps).

Super contribution information on pay slips

From 1 July 2012 employers will be required to show on pay slips the actual amount of superannuation paid into accounts. In addition, superannuation funds must notify employers and employees quarterly if regular payments cease. Therefore, if you are employed, this measure should make it easier for you to monitor your super contributions – helping to ensure that you do not breach your concessional contribution caps. 


2012-13 Australia Federal Budget review
Changes to the ATO director penalty notice regime

About Author

Kelly Morgan
Kelly Morgan

Kelly Morgan has over 32 years’ experience as a Chartered Accountant and is the Managing Partner of Azure Group heading up the Business Accounting, Technology & International divisions. Kelly is passionate about working with business owners. By working closely with her clients, Kelly helps them to maximise the opportunities in their business and assist them to achieve their goals.

Related Posts
R&D Tax Incentive: A Checklist for Registering Your R&D Activities
R&D Tax Incentive: A Checklist for Registering Your R&D Activities
Why Accurate SMSF Record-Keeping is Super Important
Why Accurate SMSF Record-Keeping is Super Important
ATO Urges Taxpayers To Be Wary Of Fake MyGov Messages
ATO Urges Taxpayers To Be Wary Of Fake MyGov Messages


Subscribe To Blog

Subscribe to Email Updates