Better Super Reforms		Download related Significant Event Notice (74KB)
What they mean to you!

Changes to Super!
In the May 2006 budget, the Federal Government announced various changes to superannuation. These changes included the removal of reasonable benefit limits (RBLs), the introduction of contribution caps and the removal of taxes on pensions. These changes are now law and will generally be introduced from 1 July 2007.

The reforms also contain quite a few transitionary concessions, which are aimed at not disadvantaging those who are approaching retirement.

The names of contributions have changed!

What were undeducted (typically member or personal) contributions are now known as non-concessional contributions - these are contributions that are not eligible for a tax deduction.

Similarly, deducted (typically employer or salary sacrifice) contributions are now known as concessional contributions - these are contributions upon which a tax deduction is claimed. These contributions are subject to a 15% tax.

What about non-concessional contributions?
Non-concessional contributions will be restricted to $150,000 p.a. However, the government has advised that this amount may be averaged over three years (that is a contribution of up to $450,000) to allow people who are under 65 to accommodate larger one-off payments.

Excess non-concessional contributions will generally be taxed at 46.5%, however, you may request that your super fund pay this tax from your super account.

What about concessional contributions?
Concessional contributions will generally be restricted to $50,000 p.a. Those individuals who will turn 50 between 1 July 2007 and 30 June 2012, may contribute up to $100,000 p.a.

Individuals can make concessional contributions to their super up to their 75th birthday. This is good news for older people who want to keep working and contributing to their super.

Excess concessional contributions will generally be taxed at 46.5%, however you may request that your super fund pay this tax from your super account. These excess contributions will also be added to your non-concessional contributions cap.

Tax File Numbers (TFNs)
From 1 July 2007, if you have not submitted your TFN to your fund, your contributions will generally be taxed at the highest marginal rate (plus Medicare levy) rather than the concessional rate of 15%. Additionally, you cannot make non-concessional contributions without having a valid TFN on file with your fund.

Can members split super with their spouses?
The new rules still allow spouse contribution splitting, however, there will be fewer financial benefits to the practice.

Who can claim a tax deduction?
Employees generally will not be able to claim a tax deduction for super contributions. Salary sacrifice is available as another tax effective super option. Self-employed members will now have the same rules as employers and employees.

Will RBLs still apply?
RBLs, or Reasonable Benefit Limits, will not apply to anyone after 1 July 2007, which will make super much simpler.

Will the death benefits rule change?
Financial dependants will receive death benefits tax-free. Non-financial dependants can only receive death benefits as a lump sum, which will be subject to tax of up to 16.5%.

If death benefits are paid to a dependant as a pension, instead of as a lump sum, the age of the person receiving the pension will have tax implications.

When does super stop?
There is now no compulsory exit age for super. Additionally, super withdrawals for the over 60s will now be tax free! Members will be able to choose how much super to take out and not have to include it in their income tax return (if over 60).

Portability
The maximum 90 day allowance for funds to process a fund transfer request will reduce to 30 days. All super funds will also be required to accept a standard form (including standardised proof of identity checks) for individuals to complete, if they wish to directly arrange a transfer request.

Want to know more?
If you would like to find out more about the proposed superannuation changes, please refer to the Better Super website.