EVER since the May Federal Budget the superannuation rule changes proposed have been subject to debate and disagreement, not only from the Opposition but within the Government.
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When Parliament resumed we expected to quickly see what the Government would attempt to have passed. That hasn’t happened.
It appears the Government is working hard behind the scenes to get agreement on the controversial elements before revealing its final proposals. However Treasurer Morrison has announced draft legislation covering the non-controversial elements.
In fact they are much more important for most Australians than the controversial components. The press is keen to report the disagreement over whether people will be allowed more than $1.6 million in their retirement pension accounts and if they can put lump sums of more than $500,000 into super.
Those items make good headlines but it’s the things all parties agree on that will make a real difference for most people. From July, 2017 anyone under age 75 will be able to make contributions to super and claim a tax deduction, regardless of their employment status.
Currently people aged 65 to 74 can only contribute if they are working at least part time. Only self-employed people can claim tax deductions for their contributions (they don’t have an employer contributing for them).
Allowing employees and anyone up to 75 to contribute and claim a deduction will open up a range of opportunities to boost retirement savings and reduce tax. Anyone with spare cash late in the financial year will be able to put it in super and get a deduction.
Employees who receive annual bonuses will be able to put them into super and reduce the tax on them. Those who have sold a property or shares and realised a capital gain will be able to make a super contribution and reduce their capital gains tax.
Anyone who is retiring and will receive unused leave payments will be able to put some in super and reduce their tax. People receiving redundancy payouts will be able to do likewise.
The spouse super contribution scheme will be much more useful. Currently only people with spouses earning less than $13,800 can use it. Under the new rules anyone who contributes $3,000 for a spouse earning up to $37,000 will get a $500 tax rebate.
The Government has also changed its mind about abolishing the low income super contribution introduced by Labor.
This is a refund of the tax on super contributions paid by people earning less than $37,000 per annum. It will now be retained helping boost low earners’ super balances.