14 May 2010

Budget 2010 Special

This means: The Government estimates a worker aged 30 with average weekly earnings will receive an extra $108,000 in super by retirement.

Lower-income earners: 
Super tax refund for lower-income earners
If you earn up to $37,000 a year and your employer makes Superannuation Guarantee contributions, salary sacrifice contributions or other before-tax super contributions on your behalf, you can expect a rebate of up to $500* each year from the Government into your super. (Starts July 2012)
*This is equivalent to paying no tax on your super contributions.

Mature-age workers:
Workers get five more SG years
The maximum age limit for receiving Superannuation Guarantee (SG) will be raised to 75. The current maximum age limit for receiving the SG is 70. (Starts July 2013)

This means: Currently, if you are aged 70-75 your employer does not have to pay SG on your behalf. You also need to meet a work test to be able to make any type of personal super contributions. From July 2013, workers are eligible for SG until the age of 75. This is five extra years of receiving and being able to make contributions into your super.

Over 50s get special contributions cap:
Australians aged 50 or over with super balances below $500,000 will be able to make up to $50,000 of concessional super contributions each year. (Starts July 2012)

This means: If you meet the above criteria, this special cap gives you the opportunity to make up for not having the benefit of a full working lifetime of super. Those aged 50 and over with super balances above $500,000 can only make up to $25,000 of concessional super contributions each year.

Co-contribution:
Co-contribution rate permanent at 100% and income thresholds frozen
The Government’s co-contribution matching rate will stay at 100% indefinitely, with a maximum co-contribution of $1,000. The income threshold will also be frozen for two years. The lower threshold will remain at $31,920 and the cut-out threshold at $61,920 until 1 July 2012.

First Home Saver Accounts:
New rules allow FHSA to be paid into mortgage
Currently, if you buy your first home before meeting the four-year investment requirement of your First Home Saver Account (FHSA), your FHSA balance must be transferred into super. New rules allow your FHSA balance to be paid into a mortgage provided the money has been invested in the FHSA for a minimum period.

• 50% tax discount on first $1,000 of interest earned
  Australians can claim a 50 per cent tax discount for the first $1,000 of interest earned, including interest earned on deposits held in banks, building societies and credit unions, and on bonds, debentures and annuity products. If you are on the 30% marginal tax rate your first $1,000 of interest income will be taxed at 15%. (Starts 1 July 2011)
  
  
• Personal tax cuts
  The 30% tax threshold will increase from $35,000 to $37,000. The 38% marginal tax rate is decreased to 37%. (Starts 1 July 2010)
  
  
• Low income tax offset increased
  The low income tax offset will be increased from $1,350 to $1,500. This means: If you are eligible for the full benefit, you don’t have to pay income tax on your first $16,000 of income.
  
  
• Senior Australian Tax Offset increased
  If you are eligible for the Senior Australian Tax Offset, you can now earn up to $30,685 (single) or $26,680 (each member of a couple) before you have to pay income tax or the Medicare Levy.
  
  
• Standard $500 tax deduction introduced
  Instead of itemising work related expenses on your tax return and claiming a deduction for professional tax advice fees, tax payers will be able to claim a standard tax deduction of $500 from 1 July 2012 (for 2012 - 13) and $1,000 from 1 July 2013 (for 2013 - 14).

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