Unless you've been hiding in a dark corner, you probably know the government made some big changes to superannuation from July 1, 2007. We've waded through the raft of new laws to give you a summary of the changes and some super strategies that you might want to consider.
Providing your TFN to your super fund
Under new rules that apply from July 1, 2007, if you don't provide your Tax File Number (TFN) to your super fund you will have to pay additional tax (at a rate of 46.5% compared with just 15%) on annual employer contributions totalling over $1,000. If you join a super fund after June 30, 2007, the higher tax rate will apply regardless of the amount. And we can't accept any personal contributions without your TFN.
Not sure if max has your TFN? Check your online account, your last member statement or give us a call on 1300 883 629 and we'll sort it out.
New limits on personal contributions
Super is one of the most tax effective investments around, and one of the key changes are new annual limits on the amount of personal contributions you can make to your super. That is, from July 1, 2007, you can make personal contributions up to $150,000 annually (or $450,000 in any three year period if you are under 65 years of age).
Retirement and withdrawing your super
Australians aged 65 years and over no longer have to cash-in their super. This means that retirees can leave their super in a concessionally taxed superannuation account!
Also, from July 1, 2007, withdrawing money from your super account is completely tax free if you are 60 and over! This is a nice change, because at the moment if you want to withdraw your super you may have to pay tax. The only exception is that payments from an unfunded (e.g. Government) scheme will continue to be taxed.
Deductible super contributions (including employer and salary sacrifice contributions)
In the past, there were aged-based limits on the amount an employer can contribute to your super. These limits include salary sacrifice contributions, because these are made by your employer from your pre-tax salary on your behalf.
However from July 1, 2007, the total of these employer and salary sacrifice contributions will be limited to $50,000 per year for everyone. (if you're aged over 50, a higher annual contribution cap of $100,000 will apply between 2007 and 2012).
These will continue to be concessionally taxed at 15%, but a higher tax rate will apply to contributions over this limit. If contributions exceed, you will have to personally pay this additional tax, but you can ask your super fund to release some of your super money to help you pay.
If you're aged over 50, a higher annual contribution cap of $100,000 will apply between 2007 and 2012. However, for the 2006/07 tax year the limit for over 50s is $105,113.
Life insurance
Purchasing life insurance through your super is a lot more attractive from July 1, 2007. This is because under the new super rules, there's no limit to the amount of life insurance that can be paid to dependents tax free. Reasonable Benefit Limits (RBLs) will be abolished, which is great because most people could never understand them anyway!
Need more info?
For for all the nitty-gritty details, you can find more info at the Australian Taxation Office.
Of course, this information is general information only and doesn't take into account your objectives, financial situation or needs.
