Tax changes were at the centre of the 2019/2020 Federal Budget with few changes to super announced. The changes that were proposed are focussed on allowing older Australians to continue contributing to super later in life. We also saw significant funding set aside for measures relating to the recommendations from the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.

It’s important to remember that measures in the Budget are at this point proposals and would require legislation to be implemented. It’s also worth noting that we saw this year’s Budget brought forward a month -  with many public commentators speculating that we could see a Federal Election as early as May. As always, we will keep members updated with any changes to super as they progress.

You can also read more about the Budget proposals in the Budget Snapshot prepared by our industry body, the Australian Institute of Superannuation Trustees (AIST).

BUDGET SNAPSHOT

READ TRANSCRIPT

On tax

• Taxpayers earning up to $126,000 a year will receive a tax cut. Low and middle income earners can benefit up to $1,080 for singles or up to $2,160 for dual income families
• The 32.5 per cent rate will be lowered to 30 per cent from 1 July 2024
• From 1 July 2022, the Government will increase the top threshold of the 19 per cent tax bracket from $41,000 to $45,000 and increase the low income tax offset from $645 to $700

On super 

• Voluntary superannuation contributions (both pre and post tax) will be able to be made by those aged 65 and 66 without meeting the work test from 1 July 2020.
• The bring-forward rule that allows people up to age 65 to make three years’ worth of post tax contributions (in 2019-20, the post tax contribution cap is $100,000 a year) will be extended to people aged 65 and 66.
• The age limit for spouse contributions to superannuation will be increased from 69 years to 74 years.
• The Government is proposing amendments to the Protecting Your Super package they introduced in the 2018/19 Federal Budget. These changes would see people under the age of 25 and those with super balances less than $6,000 need to opt-in to keep insurance within their superannuation account from 1 October 2019. These changes are currently before Parliament and were moved to a new Bill (Putting Members’ Interests First).

On the regulation of super

• Unpaid super: The Australian Taxation Office (ATO) will receive $42.1 million over four years to increase activities to recover unpaid tax and super.
• Royal Commission recommendations: Over $600 million has been allocated over five years from 2018-19 to facilitate the Government’s response to the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry. This includes:
  • more funding for the Australian Financial Complaints Authority to establish a historical redress scheme to consider financial complaints dating back to 1 January 2008
  • better resourcing of the Australian Securities and Investments Commission (ASIC) to implement its new enforcement strategy
  • establishing an independent financial regulator oversight authority that would assess and report the effectiveness of APRA and ASIC
  • establishing a Financial Services Reform Implementation Taskforce
  • funding to expand the powers of the Federal Court of Australia to tackle corporate crime 

• Sham contracting: The Fair Work Ombudsman will receive $9.2 million over four years from 2019-20 to address sham contracting arrangements often used by employers to avoid having to pay super and other entitlements to their employees.
• Early release of super: The ATO will receive $19.3 million over three years from 2020-21 to build capabilities to send electronic requests to super funds for the early release of superannuation.

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.

REGISTER FOR A SEMINAR

Recap on previous Budget announcements

As a reminder, these changes were announced in the previous Federal Budget and are currently or soon be in effect:

Already in effect:

• From 1 July 2018 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 2019:

• The Australian Taxation Office will have more power to actively reunite Australians with lost and inactive super accounts under $6,000. 

• 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 since we do not charge exit fees).

• 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 whose accounts have not received a contribution in 16 months and are inactive.

• A one-year exemption from the work test will be introduced for people aged 65 – 74 with total superannuation balances below $300,000.

• 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. 

• The Pension Loans Scheme (which works like a reverse equity mortgage) is being extended to full pensioners and self-funded retirees.

Need help?

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 and comes at no additional cost.