Money

Superannuation Contribution Concessional and Non-Concessional Caps

The Federal Government has announced that it intends to suspend the indexation of the superannuation concessional contributions cap for one year in the year ending 30 June 2014.

This means the cap will remain at $25,000 for the year ending 30 June 2014, with the indexation of the cap then occurring for the year ending 30 June 2015, when it is expected to rise to $30,000.

It was also clarified that this will also result in suspension of the indexation of the concessional contributions cap for individuals aged 50 and over (currently $50,000), and the non-concessional contributions cap (currently $150,000).

Further in relation to the concessional contributions cap for individuals aged 50 and over, the Federal Government intends to undertake further consultation on compliance cost issues raised by industry in relation to the higher concessional contributions cap for these individuals.

Superannuation Co-contribution

The Federal Government has announced it will reduce the matching rate and maximum payment of the voluntary superannuation co-contribution, effective from 1 July 2012.

This change will result in the matching rate being reduced to 50 per cent, with a maximum co-contribution of $500.

Minimum Pension Payments

The Federal Government has announced that it will extend the current drawdown relief for minimum payment amounts for account-based, allocated and market-linked pensions into the year ended 30 June 2013.

This means that the minimum drawdown for these pensions will be 75 per cent of the required amount for the years ended 30 June 2012 and 30 June 2013.

Superannuation Guarantee Legislation Introduced

The Federal Government has introduced legislation into Parliament, which proposes to increase the Superannuation Guarantee levy rate from the current 9 per cent to 12 per cent by 1 July 2013.

The proposed legislation intends to fade in the increase, as shown in the following table:

FinancialYear Commencing

Superannuation Guarantee Levy

%

Current rate to 30 June 2013

9.00

1 July 2013

9.25

1 July 2014

9.50

1 July 2015

10.00

1 July 2016

10.50

1 July 2017

11.00

1 July 2018

11.50

1 July 2019 and thereafter

12.00

 

The original announcement of this measure also included the intention to increase the age where employers no longer need to provide Superannuation Guarantee support to 75 from the current 70, also to be effective from 1 July 2013.  The introduced legislation includes this proposal.

This measure aligns the Superannuation Guarantee age requirements with other provisions, which allow employers to claim an income tax deduction for superannuation contributions made for employees up to the age of 75, as well as allowing self-employed taxpayers to make deductible personal contributions up to the same age.

However, the House of Representatives (Lower House) passed amendments in November 2011 to the original legislation to abolish the Superannuation Guarantee age limit all together. It still needs to pass the Senate before becoming law.

Therefore, should this measure be enacted, then employers will be required to make Superannuation Guarantee contributions for all employees, regardless of their age.

Reporting of Superannuation Contributions on Payslips

During the 2010 Federal Election, and as part of the 2011 Federal Budget, the Federal Government announced that they want the amount of Superannuation Guarantee contributions actually paid by their employer into employees’ nominated superannuation fund, to be included on pay slips.

Further, the Federal Government’s intention was for superannuation funds to provide a notification to employees where regular superannuation contributions from an employer ceased to be received.

The purpose of these measures is to assist employees to monitor their employer superannuation contributions.

Should these measures be passed they will be effective from 1 July 2012.

 

Stop Press: Stamp Duty Abolition

The South Australian Government released its 2011-2012 Mid Year Budget Review on 16 December 2011.

It had previously been announced that stamp duty on unlisted financial products and non-real, non-residential conveyances would be abolished from 1 July 2012.

In the 2011-12 Mid Year Budget Review it was announced that abolition of stamp duty on unlisted financial products will still occur on 1 July 2012; however, abolition of stamp duty on non-real,
non-residential conveyances will be delayed by one year to 1 July 2013.

GST Treatment of New Residential Premises

The Federal Government has introduced legislation that intends to clarify the GST treatment of new residential premises, restoring the policy intent of the legislation following a recent court decision (Federal Commissioner of Taxation v Gloxinia Investments (Trustee) (2010) 75 ATR 806).

To achieve this outcome the legislation proposes to amend the GST Act to ensure that:

  • sales or long-term leases of new residential premises by a registered entity are taxable supplies; and
  • sales or long-term leases of residential premises (other than new residential premises) are input-taxed supplies.

In the aforementioned case decision, the Full Court held that a developer’s sales of newly-constructed residential premises, which were constructed under a development lease arrangement were not the supply of new residential premises and were therefore input-taxed supplies.  The Federal Government considered that this outcome was contrary to the policy intent of the GST legislation.

The proposed legislation ensures that premises that become new residential premises because of substantial renovations, or because they have been built to replace demolished premises, cease to be new residential premises once they are sold or supplied by way of long-term lease.

The amendments will apply in relation to supplies of residential premises on or after the date of Royal Assent.

Further amendments in the legislation ensure that:

  • residential premises will not be new residential premises if they are created from residential premises that became the subject of a property subdivision plan;
  • a wholesale supply of residential premises will be disregarded in certain circumstances for the purposes of determining whether a subsequent supply of residential premises is a supply of new premises, i.e. if the residential premises have been constructed pursuant to a particular arrangement or agreement;
  • the earlier wholesale supply will also be a supply of new residential premises; and
  • the supply of premises by a government body, as a direct result of the lodgement of a property subdivision plan, for example, the granting of strata-lot leases for residential premises, will be disregarded for the purposes of determining whether a supply of premises is a supply of new residential premises.

These further amendments will apply to supplies of residential premises on or after 27 January 2011.

However, the legislation does include transitional provisions that state sales of residential premises after 27 January 2011 will not be subject to these amendments if they relate to a wholesale supply of residential premises and certain conditions were satisfied, being:

  • the premises from which the residential premises were created had earlier been supplied to the recipient of the wholesale supply;
  • the recipient of the wholesale supply was commercially committed to an arrangement immediately before 27 January 2011;
  • under this arrangement the wholesale supply was conditional on specified building or renovation work being undertaken by the recipient of the wholesale supply; and
  • no lodged Business Activity Statement (BAS) reports a net amount for a tax period that includes amounts equivalent to the input-tax credits that the recipient of the wholesale supply would have been entitled to if its acquisitions relating to the next sale or long-term lease of the residential premises were creditable acquisitions.

Taxpayers undertaking property transactions that this proposed legislation may impact should discuss this with their appropriate adviser to ensure that the transactions are structured and treated appropriately.

Adelaide Office

Level 1
136 Greenhill Road Unley
South Australia 5061

P 08 8300 0000
F 08 8300 0001

 


 

Member of
 

Business SA is a proud member of the Australian Chamber of Commerce and Industry (ACCI)