Superannuation Minister Bill Shorten and Treasurer Wayne Swan this morning announced Labor plans to tax Superannuation income streams above $100,000 at 15%, commencing on 1st July 2014.

Superannuation Minister Bill Shorten (Image: news.com.au)

“We all know that concessions can’t be open ended. Once you’ve achieved a comfortable level in retirement savings, you probably don’t need as much as those who haven’t gotten to that point.” Income streams up to $100,000 will remain tax free. In their media conference Shorten and Swan also announced a range of further reforms, including:

• simplification of the design and administration of the higher concessional contribution caps
• bringing forward to 1st July 2013 the commencement of the higher contributions concession cap for people aged 60 and over, who will be able to contribute up to $35,000 at concessional tax rates (those aged 50+ will  need to wait until 1st July 2014 for their $35,000 cap to kick in) – significantly, these higher caps will not be limited to individuals with superannuation balances below $500,000, as it was decided this would impose too high an administrative overhead
• reforms to the excess contributions tax (ECT) to ensure that people who have contributed above the cap are not penalised with a level of tax above their normal marginal rate, and they have the opportunity to withdraw the excess contributions from their super fund if they so wish
• extending the normal deeming rules to superannuation account-based income streams

If you have any questions about the impact this will have on you, and whether you need to make any changes to your current retirement planning, please contact Michelle Mulligan on (03) 9014 7125.