Changes to the Super Guarantee Rate

 

25 March 2013

Changes to the Super Guarantee Rate

To help grow Australian workers' savings for retirement, the compulsory super guarantee rate will gradually increase from 9% to 12%.

When you make super payments on behalf of your employees based on the minimum 9% super guarantee rate, you will need to increase this rate on which you base your calculations to 9.25% on 1 July 2013.

The super guarantee rate increases to 12% over seven years, as shown in the table below.

Year

Rate

Current rate

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 onwards

12.00%

What you need to do

  • Update your payroll and accounting systems to apply the appropriate increase to the super guarantee rate.
  • From 1 July 2013, increase the rate you use to work out the super guarantee payments you make for your employees from 9% to 9.25%.
  • Continue to increase the rate you use to work out the super guarantee payments you make for your employees each year until 1 July 2019.
  • If you have 19 or fewer employees, consider using the Small Business Superannuation Clearing House to help you meet your super guarantee obligations.

Upper Age Limit Being Removed

From 1 July 2013, the upper age limit for compulsory super is being removed - this means no matter how old you are, if you are working and eligible, you can still grow your super.  

 

Making it fairer for everyone

There are limits on how much you can contribute to super before incurring extra tax.

From 1 July 2012, your concessional (before tax) contributions cap will be $25,000. If you go over the cap by no more than $10,000 in 2012-13 - and it is the first time your concessional contributions have exceeded the cap since 1 July 2011 - you may receive a once-only offer to have your excess contributions refunded and taxed at your marginal tax rate, rather than paying excess contributions tax (which may be higher).

The existing $50,000 transitional cap for people 50 years old or older does not apply to the 2012-13 financial year. You may want to review the amounts you plan to contribute into super to avoid exceeding your cap of $25,000 for the 2012-13 year.

 

SMSF trustees

Self-managed super funds (SMSFs) play a major role in Australia's super system. As an SMSF trustee, there will be changes to your SMSF obligations that you need to start preparing for. The changes are aimed at increasing community confidence and improving the integrity, operation and efficiency of the SMSF sector.

Investing in collectables and personal use assets

Rules for SMSFs investing in collectables and personal use assets have been tightened and apply to all new investments from 1 July 2011. Trustees have until 1 July 2016 to ensure collectables and personal-use assets acquired prior to 1 July 2011 comply with the new standards or are disposed of.

Review your SMSF investment strategy

The rules around SMSF trustees conducting a review of their fund's investment strategy have been tightened. From the 2012-13 income year, trustees are required to regularly review their fund's investment strategy. The review is designed to ensure that the investment strategy continues to reflect the purpose and circumstances of your fund and its members.

The minutes of meetings held during the year can provide evidence of the outcomes of the review. Also consider insurance for members as part of the investment strategy.

Separation of your money and assets from the fund

Trustees have always had an obligation to keep the money and other assets of the SMSF separate from those held by them personally, or by a standard employer-sponsor or an associate of a standard employer-sponsor. Stronger Super measures introduced on 7 August 2012 mean that this requirement is now an operating standard, which gives us the power to enforce compliance.

A person who intentionally or recklessly contravenes the standard is guilty of an offence punishable on conviction by a fine not exceeding $11,000. A breach of this standard may also form part of our consideration in the decision to make an SMSF non-complying.

Valuation of fund assets at market value!!

Trustees need to value the fund's assets at market value for the purposes of preparing financial accounts and statements. This measure was introduced on 7 August 2012 as part of a suite of measures announced under Stronger Super.

The first time you will need to value an SMSF asset at its market value is for the 2012-13 income year accounts and statements, when you will need to determine the market value of the asset as at 30 June 2013. 

 

Disclaimer
All representations and information contained in the Sam David web site are made in good faith and are believed to be correct at the time of preparation. Articles are of a general nature and they do not purport to be specific taxation advice. Individual needs or other considerations have not been taken into account, thus information contained herein should not be relied upon as a substitute for detailed advice.