2013 Tax Mini Series - Superannuation Changes
Big Stick to High Income Earners
Most people know the ‘concessional’ contribution limit remains at $25000 per annum (for all ages), which is going to make it very hard for some – especially people closer to retirement - who had done some pre-planning to achieve their retirement goals with the intention of making significant contributions in the years leading into retirement.
There is always the fall-back, with limits, of making ‘non-concessional’ contributions. But that largely means you are not using the superannuation system to your best advantage.
Also most people know that ‘concessional’ contributions, such as those made on your behalf by your employer, are subject to tax at just 15% upon receipt by your superannuation fund. It beats paying 30% or 45% tax, for instance. as well as the medicare levies.
If you have an ‘adjusted taxable income’ greater than $300,000 in 2013, your contribution tax is not 15% - it is 30%.
You will likely be comparing that to a marginal tax rate of 46.5%, so the concessional superannuation contributions are still a tax saving to you, but especially if you are a very young, very high income earner, that is not a great tax saving for giving up access to your money with it being locked up in the superannuation system until you retire.
If you are older, and a high income earner, it is likely to be more of a poke in the eye and just another hurdle to you saving enough for retirement, but it does seem that Governments have turned around from trying to encourage people to save for the retirement, to a focus of trying to stop you from tax effectively saving for your retirement.
The problem 30+ years ago, was that people did not save for their retirement, and too many people were headed for the Government funded age pension.
So politicians used the tax system (and industrial laws) to force and encourage people to save for their retirement, so that people could fund their own retirement and not rely on the Government.
Now the Government still wants you to save for your own retirement, they just don’t want to provide you the same tax concessions.
So you have to make decisions, not just with the current laws in mind, but also the likely direction of future law changes, and somehow navigate enough savings to provide you a comfortable and care-free retirement.