Changes to taxation were the biggest item in the 2018/19 Federal Budget affecting personal finance and savings. Despite this, there were still some proposed changes to super which in particular may affect younger Australians growing their super savings; those with small balances; and those currently in retirement.
It’s important to understand that all announcements are proposals and are not yet law.
You can also read more on the proposed changes to super in our Budget snapshot.
- People who earn between $48,000 to $90,000 will receive a cash rebate of between $200 and $530 at the end of the financial year 2018/2019. The less you earn the less you receive.
- The tax brackets are changing. People earning $90,000 will now be subject to the 32.5% tax bracket rather than the 37% tax bracket from 1 July 2018.
- People earning less than $37,000 in the 2017/18 financial year will receive a flat $200 rebate at the end of the year.
For all members:
- From 1 July 2019 the Australian Taxation Office will have more power to actively reunite Australians with lost and inactive super accounts under $6,000. They will use data matching to automatically consolidate these accounts with members’ active accounts.
- Super funds will no longer be able to charge members exit fees when they move their super out of a fund (this will be no change for TelstraSuper).
- Super funds will no longer be able to charge more than 3% in fees for accounts with less than $6,000.
- Insurance through super will no longer be provided on an “opt-out” basis for members:
- members with low balances of less than $6,000;
- members under the age of 25 years; and
- members whose accounts have not received a contribution in 13 months and are inactive.
- People with an income exceeding $263,157 who have multiple employers can nominate that their wages from certain employers are not subject to the superannuation guarantee (SG) from 1 July 2018.
- The Pension Loans Scheme (which works like a reverse equity mortgage) is being extended to full pensioners and self-funded retirees.
- Super funds will be required to formulate a retirement income strategy for their members as well as provide simplified disclosure on retirement income products.
- A one-year exemption from the work test will be introduced for people aged between 65 – 74 with super balances below $300,000 from 1 July 2019.
- The expanded Pension Work Bonus will be extended to allow pensioners to earn up to an extra $1,300 a year without reducing their pension payments. This will also be expanded to self-employed people who earn up to $7,800 a year.
Attend a seminar to find out more
We also will be running a series of webinars and seminars on the changes which you can register for using the button below.
Recap on previous Budget announcements
As a reminder these changes were announced in previous Federal Budgets and come into effect from 1 July 2018:
- First home savers : from 1 July 2017 members could start saving for their first homes in their super account. From 1 July 2018 , eligible contributions will be available for withdrawal. Find out more about how you can use super to save for your first home.
- Downsizing and contributing to super: from 1 July 2018 eligible people can boost their super using the proceeds from the sale of their home. You have to be over 65 and selling your primary residence. Find out more about using the proceeds from the sale of your home to boost your super.
- Catch-up contributions: a new carry forward rule that comes into effect from 1 July. This will allow people with less than $500,000 in super to “carry forward” unused amounts of their pre-tax contributions cap for up to five years. Find out more about boosting your super with catch-up contributions.
If you have any questions about these new measures that are coming into place give us a call on 1300 033 166 or fill in our online form to send us a question. TelstraSuper have a team of phone based Advisers who can help you maximise your super. Phone advice is included in your membership so won't cost you anything additional.