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:
- Are you ready for the compulsory employer superannuation changes?
- Contribution Cap changes from 1 July 2014
- Centrelink changes from 1 January 2015
- ATO Penalty Regime changes from 1 July 2014
- Non-Lodging SMSF’s
- 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.
What does this mean?
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?
- The Fund’s Australian Business Number (ABN);
- Confirmation of the Fund’s bank account details; and
- An electronic service address.
How we can help?
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.
