Superannuation Measures in Government's mini-Budget:
In the Government's 2011-12 Mid-Year Economic and Fiscal Outlook, the following superannuation measures have been proposed including:
Low income superannuation contribution (LISC)
As previously announced by the Government, individuals earning up to $37,000 will effectively pay no tax on their superannuation guarantee (SG) contributions from 1 July 2012.
Under the LISC measure, the 15% contributions tax will effectively be refunded into their superannuation accounts. This refund is capped at $500.
As part of this measure, the Government has announced further reform including:
- Streamlining the LISC so that individuals automatically benefit from it without being burdened with extra paperwork. Rather than requiring eligible workers to fill out a tax return or other type of form, the Tax Office will verify an individual's income using available data. This change will help taxpayers who do not have to lodge tax returns, but who qualify for assistance to boost their superannuation savings.
- Individuals who receive less than 10% of their income through employment or business will not be eligible. This is in line with eligibility criteria for the co-contribution.
- To reduce administration costs, individuals will only receive a payment if their LISC entitlement is at least $20.
The Government will reduce the matching rate and maximum payment of the voluntary superannuation co-contribution from 1 July 2012, when the new LISC commences.
The Government has indicated that the LISC will benefit over three times as many low-income earners as the current co-contribution, and is better targeted in boosting retirement savings.
This is because low-income earners can only access the co-contribution if they make additional superannuation contributions from their income or savings, whereas all low-income earners who receive compulsory SG contributions will automatically benefit from the new initiative.
Concessional contribution caps
The Government will pause the indexation of the superannuation concessional contributions caps for one year in 2013-14.