What Superannuation Rules Remain the same for 2017-2018 Financial Years.
The rules of the Australian superannuation system that remain unchanged for the 2017/2018 financial year are detailed below.
Superannuation Guarantee (SG) rate at 9.5%SG rules have not changed for the 2017/2018 year. Under the SG Laws ,a employer must make compulsory superannuation contributions for the benefit of employees, these contributions will start to increase over time but remains in place until 30th June 2021.
A employer has to contribute the equivalent of 9.5 per cent of an employee’s ordinary time earnings to an employee’s super fund and will increase to 10 per cent for the 2021/2022 year, and gradually increase to 12 per cent from July 2025.
Super fund investment earnings still taxed at 15% which is a tax effective alternative for Australians paying higher rates of tax on personal earnings but since 1 July 2017 the government has imposed a cap on the value of assets that you may take into retirement phase and that transfer balance cap is $1.6 million. Super benefits for over-60s remain tax-free except when an individual belongs to certain older public sector funds and the individual receives a benefit from an untaxed source:
Concessional Tax Treatment. If you’re aged under 60 years but you have reached your preservation age, the taxable component of your super benefit payments from a taxed source will continue to receive concessional tax treatment, in the form of a 15 per cent pension tax offset for the taxable component of super pension payments, and a tax-free threshold for lump sum payments.
Work test for over-65s remains . if a person aged 65 years or over wishes to make a super contribution, then they must work 40 hours in a 30-day period in the financial year in which he or she plans to make the super contribution.
Splitting Contributions. You can still split my super benefits with your spouse.
The new Low Income Superannuation Tax Offset (formerly Low Income Super Contribution) continues but for lower-income earners, the ATO continues to pay the Low Income Super Contribution, which consists of a a refund of contributions tax 15% into an individual’s super account. If you earn less than $37,000 and concessional contributions are paid into your super account, either by your employer or yourself, you can expect a refund of up to $500 a year for the contributions tax deducted from the super contributions. The threshold of $37,000 applies to your ‘adjusted taxable income’, which includes non-SG concessional contributions, net investment losses and several other items.
Government Co Contributions for Concessional Contributions. If your total income is less than $51,813 for the 2017/2018 year, and you make a non-concessional contribution to your super fund, the federal government will make a tax-free co-contribution to your super account. The federal government will pay you 50 cents for each dollar you contribute to your super fund in after-tax dollars, subject to you also satisfying a work test and assuming you’re under the age of 71. The maximum co-contribution of $500, on a $1,000 after-tax contribution, is payable if your total income is less than $36,813 for the 2017/2018 year.
Tax treatment of death benefits is similar, in most cases. The tax treatment of death benefits is unchanged from previous financial years, with dependants under the tax laws e.g spouses and children under the age of 18 will continuing to receive death benefits free of tax, and non-dependants e.g financially independent adult children liable for a 15% tax on the taxable component of the death benefit.
Please contact us should you require further explanation or assistance.
For a more detailed explanation you can also refer to the ATO website.
Gregory Asher Sernack
FSL License Number 484657
Level 2 Unit 10 33 Kinsellas Drive
LANE COVE NSW 2066
Gregory Asher Sernack. MIPA, M.Comm, IPA.
Gregory Sernack Financial Services is a personalized financial services practice run solely by the principal, Gregory Asher Sernack, a CERTIFIED PUBLIC ACCOUNTANT and member of the Australian Institute of Public Accountants, holder of a Master of Commerce degree and an Australian Financial Services License No 484657.Gregory Sernack is a member of the Financial Planning Institute and the Financial Ombudsmen Services.The holding of this financial services license required meeting stringent statutory requirements regulated by the Australian Investment and Securities Commission. We are somewhat unique in that we provide therefore not only accounting but also financial services.
Gregory Sernack is licensed to provide advice under a Limited Australian Financial Services License (AFSL) as a recognised public accountant to give general advice for Financial Planning and Superannuation. Information provided is of a general nature and is based on factual information and is not intended to imply a recommendation or opinion about a financial product or course of action..
Please be advised that (a) that the advice has been prepared without taking into account clients objectives, financial situation or needs; (b) the client should, therefore, consider the appropriateness of the advice, in light of their own objectives, financial situation or needs, before acting on the advice; and (c) the advice does not relate to the acquisition, or possible acquisition, of a particular financial product. If the client is considering a particular product, the client should obtain a Product Disclosure Statement (PDS) (if required) relating to the product and consider the PDS before making any decision about whether to acquire the product: s949A (2).