Refund of excess concessional super contributions

Eligible individuals will be provided with a one off option to have excess concessional contributions refunded from their super fund and assessed as income at marginal rates instead of incurring excess contributions tax (which is applied at an effective flat rate of 46.5%).

The one off refund option will be available if an individual has made excess concessional contributions of no more than $10,000 in a year commencing from
1 July 2011.

The measure will help fix small one off inadvertent errors where excess contributions tax would currently apply but does nothing to address the longer term design flaws in the current system.  This is particularly disappointing given the strong and consistent message from industry that excess contributions tax was the number one priority for the Government to address in super.

Reduction in the minimum payment amounts for account-based pensions in 2011-12

The Government has announced that for the 2011-12 year individuals receiving an account based super pension will be required to draw 75% of the standard minimum pension.  This is an increase from 2010-11 year where 50% of the standard minimum pensions was required to be drawn. 

The full standard minimum pension will be required to be drawn in 2012-13 and subsequent years.

Reporting super on payslips

Employers will be required to report information on employee payslips about the amount of super contributions actually paid into the employee’s super account.  The reporting requirement will commence from 1 July 2012.

The measure appears to be reinstating reporting requirements that applied up until 1 January 2005.

In addition, employees and employers will receive quarterly notification from their superannuation fund if regular contributions cease after 30 June 2012.

Over 50’s and $50,000 concessional contribution cap

The Government has confirmed its intention to allow taxpayers of the age of 50 years or more to retain a $50,000 concessional contribution cap if they have less than $500,000 accumulated superannuation entitlements. 

The current transitional concessional contribution cap of $50,000 will cease to apply from 30 June 2012 and revert to the standard cap of $25,000. 

From 1 July 2012, a higher concessional contribution cap may continue to be available depending on the individual’s age and the amount of their superannuation entitlements.  The Government has not provided details on how the scheme will be administered.

Self Managed Super Funds

The Government is increasing the annual levy by $30 to $180 a year for each self managed fund payable on lodgement of the fund’s 2010-11 return.  The $50 million raised over forward estimates will be used for a range of measures including:

• Introducing administrative penalties the ATO can apply in cases of non-compliance by trustees
• Tightening legislative restrictions for investments in collectables and personal use assets (applying to new investments from 1 July 2011)
• Requiring funds to value their assets at net market value
• Introducing knowledge and competency requirements on service providers

Most changes are stated to commence from 1 July 2012 and have previously been announced.

Government funds the development of MySuper

The Government has provided funding to APRA and ASIC to implement “MySuper”, a simple low cost default superannuation product for large superannuation funds. 

The measure will be funded by an increase in the annual levy on APRA regulated funds.  The Government expects to provide funding for this measure beyond 2015.

Co-contribution threshold

The Government will not index the thresholds governing eligibility for the co-contribution.  The co-contribution phases out when individuals earn more than $31,920.  This means more people will cease to be eligible for a co-contribution and the Government’s expenditure on co-contributions will fall.

SMSF Auditor registration is coming

The Government has announced a raft of measures aimed at improving the efficiency and effectiveness of the SMSF sector.  Among these measures will be knowledge and competency requirements for SMSF auditors. 

From 1 July 2012 SMSF auditors will need to be registered with ASIC and will be required to pay an, as yet unspecified, annual registration fee.  ASIC will develop an online SMSF auditor registration process.