Super changes for 2014/15

Now that we are in a new financial year there are a number of changes relating to superannuation which have now commenced.

Employees

The Super Guarantee (SG) rate increases from 9.25% to 9.5% of your ordinary earnings.

If you are 49 years or over in the 2014/15 financial year, your concessional contributions cap has temporarily increased to $35,000pa. For those under 49, your cap is $30,000pa.

If you earn less than $37,000 in 2014/15, the government may contribute up to $500 as part of the Low Income Super Contribution (LISC) scheme. Your entitlement will be calculated and contributed to your fund when you lodge your income tax return. (Be aware that the government plans to abolish the LISC scheme however the legislation to achieve this has not yet passed through Parliament.)

If you make non-concessional contributions to super of up to $1,000 you may be eligible to receive the government's superannuation co-contribution payment of up to $500 if your annual income is less than $34,488 with the payment reducing progressively until phasing out altogether once your income reaches $49,488. 

If your combined annual income and low-tax contributions exceed $300,000, an additional contributions tax of 15%, known as Division 293 tax, will be applied to your concessional contributions.

Employers

As an employer you must increase your SG contributions for all employees from 9.25% to 9.50%. You are required to make SG contributions to all eligible employees aged 70 years or over.

A data and e-commerce standard, called SuperStream, has been created to assist you with making super contributions to your employees’ funds. The standard aims to streamline the data and superannuation transactions, providing reliable electronic records of those contributions. It will also reduce the time taken for contributions and rollovers to be credited to superannuation accounts.

Employers with 20 or more employees must start using SuperStream from 1 July 2014. If you have fewer than 20 employees you have until 1 July 2015. To learn more, the ATO website www.ato.gov.au provides further information.

SMSF trustees

Self-Managed Superannuation Fund trustees are required to consider insurance within the super fund as part of the overall investment strategy. After July 2014, the type of insurance cover will be limited to benefits that are consistent with normal superannuation release conditions such as death or a terminal illness. If you have been considering trauma or income protection cover inside your super fund, speak with us about establishing this cover before 30 June 2014.

A new penalty regime for SMSF trustees commences on 1 July 2014. This increases the range of remedies available to the ATO when addressing breaches by SMSF trustees. These remedies now include:

·       rectification directions requiring trustees to rectify breaches within a specified timeframe and to provide the ATO with evidence of the rectification;

·       education directions requiring trustees to undertake specified courses relating to SMSF compliance within a stipulated timeframe; and

·       administrative penalties providing a range of fines that can be imposed on trustees. These fines must be paid by the trustees personally and not from the assets of the SMSF.

This is only a summary. For complete details on how these factors might affect you, please contact us on 02) 6583 7588 or enquiries@directadvisers.com.au.