While the changes to superannuation are not significant, they may be of interest to you. We’re here to help you get your financial future sorted so please get in touch with us if you have any questions.
It is important to remember that all changes are proposed, unless stated otherwise.
Protecting your super
The budget contains a number of reforms with the aim of protecting your super. There is a focus on preventing the erosion of small member balances.
- From 1 July 2019 superannuation funds will no longer be allowed to charge exit fees to members who make withdrawals from their superannuation accounts or roll over their super to other funds.
- There will also be a cap of 3% imposed on passive fees charged on superannuation accounts with balances under $6,000.
- Accounts with no activity within the past 13 months, and with balances under $6,000 will be sent to the ATO. This will enable these accounts to be reunited with active super accounts belonging to the same person, and will prevent fees from eroding the balance in the meantime.
You can use BUSSQ’s Super Search tool here to find all your super and roll it into your BUSSQ account. As exit fees still apply, you may want to check with your other fund what these will be, and also confirm if your other fund has any insurance cover you want to keep, before you roll in. You can call us to assist with this process on 1800 MY BUSSQ (1800 69 2877).
From 1 July 2019, if you are under age 25, have a balance under $6,000, or your account has not received a contribution in 13 months, you will need to opt in to have insurance cover included in your super. Members who fit into these categories will have 14 months to opt in to retain their insurance cover before it is automatically switched off.
BUSSQ is here to work with you to get your insurance and super sorted. Call us on 1800 MY BUSSQ (1800 69 2877) to find out what cover you currently have and how we can assist you further.
The government will introduce an exemption from the work test for voluntary contributions to superannuation, for people aged 65-74 with superannuation balances below $300,000, in the first year that they do not meet the work test requirements. Existing contribution cap rules will continue to apply to contributions made under the work test exemption. This will apply from 1 July 2019.
The government will allow individuals who have multiple employers and income in excess of $263,157 to nominate that their wages from certain employers are not subject to the superannuation guarantee (SG) from 1 July 2018, to avoid breaching the concessional contributions cap. It is anticipated that these employees would negotiate to receive additional income which would then be subject to marginal tax rates.
The ATO will also receive additional funding to ensure that everyone who claims a deduction on their personal superannuation contributions in their tax return, has also lodged the appropriate notice with their fund.
Tax rate changes
The Budget makes a number of changes to marginal tax rate brackets and tax offsets for low and middle income earners in three stages, as part of a ‘personal income tax plan’. More information can be found here.
The increase to the Medicare Levy has not gone ahead.
Businesses will no longer be able to receive cash payments above $10,000 for certain transactions from 1 July 2019. This is part of a range of measures to combat the ‘black economy’.
Superannuation funds will be required to create a retirement income strategy for super fund members, and provide products that offer ‘income for life’. The industry term for these is Comprehensive Income Products for Retirement (CIPR’s).
Also included in the budget is a range of measures intended to support older Australians. These measures include:
- Changes to the Pensioner Work Bonus to encourage pensioners to continue working
- The Pensions Loans Scheme will be expanded to cover all Australians over Age Pension age, and to increase the maximum fortnightly income stream to 150% of the Age Pension rate. The Pensions Loan Scheme effectively provides a reverse mortgage, to enable individuals to use the equity in their homes to increase their incomes.
The Budget also contained other measures which may impact you. To see the full Federal Budget, go to budget.gov.au.
Please remember that unless stated otherwise, changes announced in the Budget are proposed changes only until legislated. To speak to a Financial Planner about how these changes may affect you, call BUSSQ on 1800 MY BUSSQ (1800 692 877).
The information supplied in this article is general advice only and does not take into account or consider your personal objectives, financial situation or needs. Before acting, you should review the relevant Product Disclosure Statements to ensure you have all the information about the BUSSQ relevant products and how they work and consider the appropriateness of the information to your needs or seek independent advice from a properly qualified professional.