Superannuation changes are coming

From your local adviser at Crowe Horwath

There are a number of changes happening in the Superannuation arena at present. To help you understand the impact these changes may have, here is a summary and details of how they may affect you including:

  1. Are you ready for the compulsory employer superannuation changes?
  2. Contribution Cap changes from 1 July 2014
  3. Centrelink changes from 1 January 2015
  4. ATO Penalty Regime changes from 1 July 2014
  5. Non-Lodging SMSF’s
  6. Additional Tax on Super Contributions for High Income Earners

1. Are you ready for the compulsory employer superannuation changes?

From 1 July 2014 it will be compulsory for employers with 20 or more employees to pay superannuation contributions to all superannuation funds (including SMSF’s) electronically.

For all remaining employers (i.e. small employers with 19 or less employees) it will be compulsory to make superannuation contributions electronically from 1 July 2015.In both cases there is an exception to the rules where contributions are made to funds for ‘related parties’ of the employer.

What does this mean?

As noted above, employers will be required to make superannuation contributions electronically.This means that the contribution data is sent electronically in message format to the fund, and the contribution payment is sent electronically through the banking system.

The data message and payment are linked by a payment reference number which enables reconciliation by the receiving fund.

What do employers have to do?

There are three pieces of information that an employer must have by 31 May 2014 if contributions are to be made to the fund from 1 July. These are:
  • The Fund’s Australian Business Number (ABN);
  • Confirmation of the Fund’s bank account details; and
  • An electronic service address.
If you are a large employer (that is an employer with 20 or more employees), you will need to ensure that your payroll system is able to include the additional information by the required time to enable contributions to be made to all superannuation funds.If you are the trustee of an SMSF which utilises Crowe Horwath for administration and advisory services, please be aware that we are currently collating the relevant information to enable your fund to provide this to you so that you can on-forward it to your employer.

How we can help?

As an employer or SMSF trustee, if you have any questions in regards to the introduction of SuperStream, please contact your Crowe Horwath advisor and we can assist you to address what is required.

2. Contribution Cap changes from 1 July 2014

The Government recently announced changes to the superannuation contribution caps effective from 1 July 2014.

The changes are summarised below:

Concessional Contributions (Deductible Contributions)

Year Aged 59+ at start of year Aged 58- at start of year
 2013/14  $35,000  $25,000
 Year  Aged 49+ at start of year  Aged 48- at start of year
 2014/15  $35,000  $30,000

 Non-Concessional Contributions (Non-Deductible Contributions)

Year Contributions
 2013/14  $150,000
 2014/15  $180,000

People aged under 65 years old may be able to make Non-Concessional Contributions of up to three times their Non-Concessional Contributions cap over a three year period. This is known as the “bring forward” rule.

Non-Concessional Contributions (Non-Deductible Contributions) – Bring Forward Caps

Year Contributions
 2013/14  $150,000 x 3 = $450,000
 2014/15  $180,000 x 3 = $540,000

It is important to note that the cap applies from the first year it is exceeded (e.g. if $160,000 is contributed in 2013/14, the $450,000 cap applies for the 3 year period).
There is an opportunity for planning to be undertaken prior to 30 June 2014. Please contact your Crowe Horwath advisor to discuss these in regards to your circumstances.

3. Centrelink changes from 1 January 2015

The rules in regards to how your pension is assessed for Centrelink entitlements are changing from 1 January 2015.

From 1 January 2015, the normal deeming rules will be applied to superannuation account-based income streams where currently they are concessionally assessed. Grandfathering rules apply to income streams that are in place prior to this date where the member is also in receipt of a Centrelink (or DVA) pension or allowance before 1 January 2015.

The impact of these changes could be significant on your Centrelink entitlements and need to be assessed on a case by case basis.
It is important that you are aware of how this impacts you. We suggest you speak to your contact your Crowe Horwath advisor to get a thorough understanding of the impact on your individual circumstances.

4. ATO Penalty Regime changes from 1 July 2014

A new penalty regime has been introduced for the ATO to implement in regards to SMSF’s. The changes will take effect from 1 July 2014.
Under the new regime, the following sanctions may apply:

  • Administrative Penalties – dollar penalties (up to $10,200 per trustee) may be applied by the ATO. If incurred, these will be applied to trustees and directors of corporate trustees and must be paid personally (not from assets of the SMSF);
  • Education Directions – SMSF trustees may be directed to undertake a course of education to improve their ability to meet their obligations as a trustee;
  • Rectification Directions – this will require a person to take certain actions to rectify a contravention within a certain period. Proof of the rectification will also need to be provided to the ATO; and
  • Civil & Criminal Penalties – these will apply to persons who promote illegal early release schemes.

How we can help?

Don’t get yourself caught out by these potentially significant penalties, talk to your Crowe Horwath advisor now if you need assistance to bring your fund returns up to date. Also, if you know of other trustees who may need our assistance, we would appreciate the opportunity to help them out.

5. Non-Lodging SMSF’s

The ATO will now treat an SMSF that has two or more returns outstanding as a “non-person”. This has the potential to have a serious impact on an SMSF as follows:

  • Ability to receive contributions from employers;
  • Ability to receive rollovers;
  • Ability to receive transfers; and
  • They will not be able to borrow for property.

If you have outstanding returns for your SMSF, or know of trustees we can assist in this regard, please contact your Crowe Horwath advisor for assistance.

6. Additional Tax on Super Contributions for High Income Earners

A reminder that a higher rate of tax may be applicable to concessional contributions made on your behalf, if you are considered to be a high income individual.

The high income threshold is $300,000. The calculation of what is included in your income for these purposes is quite complicated.

If you believe that this may apply to you, please discuss this in more detail with your Crowe Horwath advisor.

We are here to help

At Crowe Horwath, we have the expertise and specialists who can help you understand how these changes will impact you. If you have any questions feel free to contact your local advisor to get a thorough understanding of how these changes may affect your individual situation.