Superannuation Rates and Thresholds for 2014/15
5 March 2014
The Australian Taxation Office (ATO) has announced key superannuation rates and thresholds to apply in respect of the 2014/15 financial year.
The increase in thresholds should be considered in terms of the impact to your contribution strategies and retirement planning.
Concessional contributions caps
- The concessional contributions cap has increased to $30,000 for 2014/15, up from $25,000.
- The special concessional contributions cap for older people remains at $35,000, but will apply to anyone aged 49 or over on 30 June 2013.
Concessional contributions include employer contributions (including contributions made under a salary sacrifice arrangement); and personal contributions claimed as a tax deduction by a self-employed person.
Remember that if you have more than one superannuation fund, the concessional contributions made to all your funds are added together and count towards the concessional contributions cap.
Non-concessional contributions cap
- The non-concessional contributions cap has increased to $180,000, up from $150,000.
Non-concessional contributions include personal contributions for which you do not claim an income tax deduction.
Non-concessional bring-forward cap
- The bring-forward non-concessional cap has increased to $540,000, up from $450,000.
People aged less than 65 years on 1 July in a financial year 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.
The bring-forward cap is three times the non-concessional contributions cap of the first year. If you brought forward your contributions in 2014/15, it would be 3 x $180,000 = $540,000.
This consequential change to the non-concessional contributions cap means you can put more into super.
To maximise non-concessional contributions you may consider the strategy of making $150,000 contributions in 2013/14 and $540,000 of contributions after 1 July 2014. Care should be taken however, to ensure that the $150,000 cap in this financial year is not accidently exceeded, triggering the ‘bring forward’ provisions as the consequences can be serious.
Increases to the concessional contributions cap and the non-concessional contributions cap from 1 July 2014 are a welcome development. You may wish to consider increasing salary sacrifice arrangements for 2014/15 to take advantage of the newly indexed $30,000 concessional contributions cap ($35,000 for those now aged 49 and above).
The Super Guarantee (SG) rate
The SG charge percentage will be increasing from 9% to 12%, phasing in from 1 July 2013. The Abbott government however, has a Bill currently before Parliament that proposes a freeze to the SG rate at 9.25% for 2014/15 and 2015/16. Subject to the passage of the Bill, the SG rate will not increase to 9.5% until 1 July 2016.
The SG age limit has also been abolished from 1 July 2013 (instead of increasing it from age 70 to 75 as originally proposed).
Other Super thresholds
- Capital Gains Small Business contributions cap – increased to $1,355,000 from $1,315,000
- Low rate tax cap – increased to $185,000 from $180,000. For people aged less than 60 years old who are retired and wish to draw a lump sum from super, this is the amount that can be withdrawn at 0% tax; amounts thereafter are taxed at 15% plus the Medicare levy.
- Account-based pension drawdown rates – no change.
- Maximum SG contributions base – increased to $49,430 from $48,040 per quarter.
- Government Co-Contribution lower threshold – increased to $34,488, up from $33,516. (This is the threshold above which the maximum co-contribution amount of $500 begins to taper.)
- Government Co-Contribution higher threshold – increased to $49,488, up from $48,516. This is the threshold above which the co-contribution will not be paid.
- Low income superannuation contribution – $37,000 income threshold is not indexed. (The Federal Government has introduced legislation which, if passed by the Senate, will abolish this co-contribution in respect of 2013/14 and subsequent financial years.)
The full list of thresholds is available from the ATO website at: http://www.ato.gov.au/Rates/Key-superannuation-rates-and-thresholds/
If you are considering changes to your contributions or retirement planning strategy please speak with your local Boyce Accountant or Elizabeth Timmins or Julie Schofield in the Boyce Super team in Cooma on 6452 3344.
Sources: IOOF Advisor Connect Tech Alert 4 March 2014; SuperCentral at www.supercentral.com.au