Superannuation Excess Contributions Tax (SECT)
It was announced in last night’s budget that the Government will allow individuals the option of withdrawing non concessional superannuation contributions where those contributions would cause the individual to have exceeded their non-concessional cap. This is a welcomed change as it will now allow an individual to avoid paying the SECT by withdrawing the amount of the excess contribution from the Fund.
The only complication is that the individual will also have to withdraw the earnings on that excess contribution. The individual will be taxed on the earnings (or deemed earnings) at their marginal tax rate. The Government will speak with various interest groups before determining how the earnings on the excess contributions will be determined.
Commonwealth Seniors Card
With effect form 1 January 2015 the Government proposes to tighten the eligibility criteria for individuals applying for a Commonwealth Seniors Card. From 1 January 2015 the income threshold of $80,000 will now include superannuation income streams. This measure will make it difficult for self-funded retirees to obtain a Commonwealth Seniors Card in the future.
The eligibility age for the Aged Pension will rise to 70 years for both men and women by 1 July 2035.
For those currently receiving the Aged Pension, the bi-annual increases will now be linked to the half yearly movement in the CPI.