Simpler super - overview

Tax-free benefits for people aged 60 and over

For most people aged 60 and over, who receive super benefits from a taxed source, payment of a benefit as a lump sum or income stream (such as a pension) will be tax-free.

If your super comes from a source that is not taxed (such as public service super funds), your benefits will continue to be taxed when you receive them. However, you may be entitled to a tax offset that will reduce the tax payable on these benefits.

Reasonable benefit limits will be abolished for benefits received from 1 July 2007. These currently limit the benefits you can receive at a concessional tax rate from your super.

Limits on concessional contributions to super

From 1 July 2007, concessional contributions made to super will be subject to an annual cap of $50,000. 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. The age-based limits on deductions that currently exist for these contributions will no longer apply.

You will be taxed on concessional contributions over the $50,000 cap at a rate of 31.5%. You can ask your super fund to release money to pay this excess contributions tax.

Between 1 July 2007 and 30 June 2012, a transitional concessional contributions cap will apply. During this time, the annual cap will be $100,000 for people aged 50 or over.

Limits on non-concessional contributions to super

From 1 July 2007, non-concessional contributions made to super will be subject to an annual cap of $150,000.

Non-concessional contributions include personal contributions for which you do not claim an income tax deduction.

There will be a ‘bring-forward’ option available, meaning that people under 65 years of age can make non-concessional contributions of up to $450,000 over a three-year period.

You will be taxed on non-concessional contributions over the cap at the rate of 46.5%. You will be required to ask your super fund to release an amount that is equal to the tax liability.

For the self-employed

If you are self-employed you may be able to claim a full tax deduction for your super contributions.

You may also be eligible for the super co-contribution.

Your tax file number and your super fund

From 1 July 2007, the personal contributions you intend to deduct and employer contributions made to new super accounts without a tax file number (TFN) will be taxed an additional 31.5%. For existing accounts, the additional 31.5% will generally be payable on all contributions once the contributions for the year reach $1,000. For accounts created after 30 June 2007, the additional 31.5% will be payable regardless of the amount contributed. To avoid this you must provide your TFN to your super fund.

If your fund pays the additional tax and you provide your fund with your TFN, your fund may be entitled to claim a tax offset. Your fund will credit the tax offset to your account. However, regulations to give effect to this announcement have not yet been made.

The government has also announced that super funds will not be able to accept certain member contributions if you have not provided your TFN. However, regulations to give effect to this announcement have not yet been made.

Changed unclaimed super reporting for private sector super funds

Unclaimed money from private sector super funds will have to be paid to the Australian Government (except for state and territory government superannuation schemes).

From 1 July 2007, unclaimed super from private sector schemes is required to be paid to us, rather than to their state or territory authority.

The reporting requirements for each half-year period are as follows:

• 1 July 2006–31 December 2006, funds must lodge their reports to their state or territory authority by 30 April 2007, and
• 1 January 2007–30 June 2007, funds must lodge their reports and forward unclaimed money to us by 31 October 2007.

Labor promises to simplify business regulation, including GST

In an address in Canberra, Labor Leader Kevin Rudd promised to streamline and simplify regulation affecting business. Among other things, he said Labor would implement BAS Simplification as outlined in the Banks Report, and, in consultation with small business, develop a new policy called "BAS Easy". Mr Rudd said Labor was also currently considering giving relief to independent contractors and home-based businesses by raising the threshold for mandatory completion of the BAS from $50,000 to $75,000.