The events of the last week of the 2013 financial year will no doubt find their way into Australian political history. The Prime Minister elect, returned as Australian Prime Minister this week, executing a stunning party room coup almost three years to the day after being ousted by his former deputy AND less than three months from a general election.
While these events captured the mainstream press, in the background two significant Budget proposals (May 2013) have now been passed and received Royal Assent on 28 June 2013. This change of law requires individuals to review their financial position to take advantage of, or to protect themselves against, the changes.
While these events captured the mainstream press, in the background two significant Budget proposals (May 2013) have now been passed and received Royal Assent on 28 June 2013. This change of law requires individuals to review their financial position to take advantage of, or to protect themselves against, the changes.
These two changes were contained in the Tax and Superannuation Laws Amendment (Increased Concessional Contributions Cap and Other Measures) Bill 2013.
The first change (as reported in the Financial Keys May 2013 Federal Budget update) was the proposal to increase the concessional contributions cap from $25,000 to $35,000 as follows:
As a result, it is important that individuals age 59 years or over on 30 June 2013 urgently review their existing salary sacrifice arrangements to take advantage of this higher contribution cap.
The second change, which was also reported in our Federal Budget update, introduces a new and additional ‘super tax’ of 15% against concessional contributions for those individuals whose income (surcharge income) and concessional contributions exceeded $300,000 p.a.
Broadly speaking Surcharge Income includes:
Therefore, as this law is retrospective in nature, from 1 July 2012, if your grossed up income including concessional contributions exceeds $300,000, you may now be liable to pay the additional 15% tax on some/all of your concessional contributions.
The additional tax can either be paid
As a result of this second law change, it is important that individuals in this salary category urgently review their existing superannuation and related arrangements and consider what options are available to offset the negative impact of this new law.
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