Super Guarantee Changes
On 2 May 2010, Federal Treasurer Wayne Swan announced an increase in the Superannuation Guarantee (SG) rate from 9.0% to 12.0%. Last year, this became law and will be effective from 1 July 2013.
This measure will significantly increase future retirement incomes for Australian workers through the gradual increase in the superannuation guarantee (SG) rate to 12.0%.
The SG rate will be increased gradually with initial increments of 0.25% on 1 July 2013 and on 1 July 2014. Further increments of 0.5% will apply annually up to 2019-20, when the SG rate will be set at 12.0%.
On 2 May 2010, Federal Treasurer Wayne Swan announced an increase in the Superannuation Guarantee (SG) rate from 9.0% to 12.0%. Last year, this became law and will be effective from 1 July 2013.
This measure will significantly increase future retirement incomes for Australian workers through the gradual increase in the superannuation guarantee (SG) rate to 12.0%.
The SG rate will be increased gradually with initial increments of 0.25% on 1 July 2013 and on 1 July 2014. Further increments of 0.5% will apply annually up to 2019-20, when the SG rate will be set at 12.0%.
YearRate (%)
2013-14
2014-15
2015-16
2016-17
2017-18
2018-19
2019-20
9.25
9.50
10.0
10.5
11.0
11.5
12.0
MySuper was announced by the Federal Government as a means to achieve a low cost default superannuation for employees who haven’t made any decisions with their super (e.g. chosen an investment option or a super fund). These funds will offer a basic set of product features.
Importantly, members of super funds continue to have full CHOICE, and may elect to have their superannuation paid to their existing preferred super fund or any other super fund of their choice.
At the time of writing, final pieces of the MySuper legislation are yet to be finalised.
The Government previously announced that superannuation funds will be able to offer MySuper products from 1 July 2013.
From 1 January 2014, employers will be required to direct super contributions to a MySuper fund for any employee who has not made an active choice for their super. The member must make an active choice of superannuation fund to avoid this.
Trustees of superannuation funds offering MySuper products may also need to transfer some or all of the existing balances of their default members to a MySuper product by 1 July 2017.
The Government has decided that funds choosing to offer MySuper must offer a product with a single investment strategy and a standard set of fees available to all prospective members. Care should be taken however as existing superannuation funds, particularly for large employer plans may well be more cost effective. Investment performance (net of fees), should be key consideration.
As new MySuper products are yet to be launched, it is too early at this stage to make a call on the average level of fees/charges which may applied however what a member can be charged in MySuper products will be generally limited to:
There will be a requirement to offer Life and Total and Permanent Disability (TPD) cover on an opt out basis. Income Protection insurance will also be offered.
There are caps on the amount you can contribute to superannuation each financial year that are taxed at lower rates. If you contribute more than these caps you may have to pay extra tax.
The cap amount and how much extra tax you have to pay depends on whether the contributions are:
Concessional contributions include;
For 2012-13 and 2013-14 the contribution cap remains at $25,000 p.a.
Non-concessional contributions include personal contributions for which you do not claim an income tax deduction.
For 2012-13 the contribution cap remains at $150,000 p.a. For those under 65 years of age, you may be able to make non-concessional contributions up to three times the non-concessional contributions cap over a three-year period. This is known as the 'bring-forward' option. This means that under certain circumstances you can contribute up to $450,000 ($150,000 x 3) in one financial year.
Advice should be sought as to how you might maximise this rule.
The individual income tax rates for 2012-13 and 2013-14 are outlined in the table below:-
Taxable IncomeTax on this Income
$0 - $18,200
$18,201 - $37,000
$37,001 - $80,000
$80,001 - $180,000
$180,001 and over
Nil
19c for each $1 over $18,200
$3,572 plus 32.5c for each $1 over $37,000
$17,547 plus 37c for each $1 over $80,000
$54,547 plus 45c for each $1 over $180,000
Please note, the above rates do not include the Medicare levy of 1.5%.
The Australian equity market started the year with great gusto with key economic metrics broadly supporting the market. This swiftly turned in February and the local bourse continued to fall throughout the remainder of the quarter. The slide was largely due to the uncertainty over US President Trump's tariffs. Fear and speculation finally became reality as the index began its steep decent in early February, falling circa -10.3%; an official correction and potentially heading towards bear territory and global recession. The Australian market reacted sharply and negatively to the Trump tariffs during the March quarter and overall experienced its steepest losses since the onset of the COVID-19 pandemic. The Australian equity market ended the quarter down (-2.8%).
Although we haven’t received any calls, as we suspect most people are quite familiar with market volatility over the years, we thought this update would put some recent market movements into perspective.
It was a nervous start to the quarter for the Australian equity market (ASX 200), as the impact of China stimulus measures and implications of rising bond yields was being digested. The resources sector felt the brunt of this nervy start falling over 5% for the month of October, however the broader market did manage to reach an all-time high on the 15th of October closing above 8,300 for the first time.