Superannuation changes announced 5 April 2013

In superannuation policy announcements ahead of the May 2013-14 Federal budget, then Treasurer Swan and Minister Shorten issued two joint media releases on 5 April 2013, announcing a number of important changes in the way superannuation is taxed, and other changes.

Note: A number of the policy changes set forth on 5 April 2013 have since been modified or dropped.

In brief:

Higher Tax On Super Fund Earnings

(this proposal has since been scrapped by the incoming Coalition government)

It was proposed that from 1 July 2014 the earnings over $100,000 of super funds in the pension phase for each individual be taxed at 15%.  On 6 November 2013 the (new Coalition) Treasurer announced that this measure is amongst a number of previous Labor government initiatives that is not to proceed. See here.

Superannuation Contribution Caps lift to $35,000

• From 1 July 2013 the concessional contributions cap will be lifted to $35,000 unindexed for people aged 60 and over (up from the current level of $25,000).
• People aged 50 and over will also be able to access the $35,000 unindexed cap from 1 July 2014
  • This represents a back-down from previous government commitments to restore the cap to $50,000 for the over 50’s from 1 July 2014.
  • The general (indexed) cap will converge towards the same figure and is expected to reach $35,000 by the 2018 year.

Softening of Excess Contributions Tax

• Excess contributions reforms:
  • Excess concessional contributions made from 1 July 2013 can be withdrawn
  • Excess contributions tax will be reduced (from the previous level of 46.5%) to the individual’s marginal rate plus interest

Pension deeming rules to be extended

• Pension deeming rules to be applied to new superannuation account-based income streams assessed under the pension income test rules after 1 January 2015. Products held by pensioners before 1 January 2015 to be grandfathered indefinitely for the life of the product.

Tax Concessions Extended To Deferred Lifetime Annuities

• From 1 July 2014 deferred lifetime annuities to receive the same concessional tax treatment that superannuation assets supporting income streams receive.

Lost Superannuation transfer thresholds to be increased

• Lost superannuation – the account balance threshold for transfer of inactive account balances to the ATO under the 5 April 2013 proposal was to be increased to $2,500 from 31 December 2015 and $3,000 from 31 December 2016 (up from $2,000 as previously announced in MYEFO 2012-13).
  • As part of the previous Government’s 2013 Pre-election Economic Statement these threshold adjustments were altered to an intended  $4,000 from 31 December 2015, and to $6,000 from 31 December 2016. 
  • Current position: On 6 November 2013 the current Federal Government announced an intention to proceed with the former government’s proposal. It is proposed that the threshold will increase from $2,000 to $4,000 on 31 December 2015 and then to $6,000 on 31 December 2016.

Council of Superannuation Custodians

• A proposal to establish a Council of Superannuation Custodians to ensure that any future changes are consistent with an agreed Charter of Superannuation Adequacy and Sustainability.

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This page was last modified on 10 July 2015