Federal Budget 2012/13
Higher concessional contributions cap for over 50s deferred
The Government is proposing to defer the start date for the increase of the concessional contribution cap for individuals age 50 and over by two years from 1 July 2012 to 1 July 2014. Originally the Government had planned to introduce a concessional contribution cap of $50,000 pa for individuals age 50 and over with total superannuation account balances less than $500,000 from 1 July 2012. Currently there is a concessional contribution cap of $50,000 pa for individuals age 50 and over regardless of their super account balance, which ceases on 30 June 2012.
Concessional contributions include salary sacrifice and Superannuation Guarantee contributions (made by your employer).
The deferral means that for 2012/13 and 2013/14 all eligible individuals, including those over age 50, will have a concessional contributions cap of $25,000 pa. The Government forecasts that in 2014/15 the cap is likely to increase to $30,000 pa through indexation and the higher cap for individuals age 50 and over would then commence at $55,000 pa.
Higher tax rate for contributions of very high income earners
From 1 July 2012 individuals with an income of greater than $300,000 will have their concessional contributions taxed at 30% instead of 15%.
The definition of income for the purpose of this measure will include taxable income, concessional superannuation contributions (eg Superannuation Guarantee and salary sacrifice contributions), adjusted fringe benefits, total net investment loss, target foreign income and tax-free government pensions and benefits, less child support.
If an individual's income (excluding their concessional contributions) is less than the $300,000 threshold, but the inclusion of their concessional contributions makes them exceed the threshold, the 30% tax rate will only apply to the part of the contributions that are in excess of $300,000.
The higher tax rate will not apply to concessional contributions which exceed the concessional contributions cap of $25,000, as these are already taxed at the individuals' top marginal rate.
Personal income tax rates
The Government did not make any changes to the currently legislated tax rates that are to apply to residents from 1 July 2012. The flood levy is scheduled to cease on 30 June 2012.
From 1 July 2012 the tax free threshold will be increased from $6,000 to $18,200 and there are increases in some other tax rates. Other changes included:
- In 2012/13, an increase in the first two marginal tax rates from 15% to 19% and from 30% to 32.5% respectively
- In 2015/16, the tax-free threshold will be increased to $19,400 and the second marginal tax rate will increase from 32.5% to 33%.
| 2011/12 | 2012/13 and 2013/14 | 2015/16 | |||
| Tax bracket | Tax rate | Tax bracket | Tax rate | Tax bracket | Tax rate |
$0 to $6,000 | 0% | $0 to $18,200 | 0% | $0 to $19,400 | 0% |
$6,001 to $37,000 | 15% | $18,201 to $37,000 | 19% | $19,401 to $37,000 | 19% |
$37,001 to $80,000 | 30% | $37,001 to $80,000 | 32.5% | $37,001 to $80,000 | 33% |
$80,001 to $180,000 | 37% | $80,001 to $180,000 | 37% | $80,001 to $180,000 | 37% |
$180,001+ | 45% | $180,001+ | 45% | $180,001+ | 45% |
Tax announcements scrapped
Discount for interest income
The Government is not proceeding with the proposed 50% discount for income earned from interest, which was due to commence on 1 July 2013.
Standard deductions
The Government is not proceeding with the proposed standard personal tax deduction which was due to commence on 1 July 2013.
Low income superannuation contribution
The Government is introducing a low income superannuation contribution (LISC) of 15% of an individual's concessional contributions (eg Superannuation Guarantee and salary sacrifice) up to a maximum of $500 in 2012/13 and future years. If eligible, this means individuals will receive a deposit in their super account from the Government for up to $500. To be eligible, an individual's adjusted taxable income cannot exceed $37,000. It applies to concessional contributions made from 1 July 2012 (that is, the first LISC will be paid in the 2013/14 financial year).
Please note information in this Budget Update May 2012 is based on proposed changes announced in the Federal Budget 2012/13 and enacted legislation. The information contained in this document is given in good faith and has been derived from sources believed to be reliable and accurate. No warranty as to the accuracy or completeness of this information is given and no responsibility is accepted by VicSuper Pty Ltd or its employees for any loss or damage arising from reliance on the information provided.
