Of course the fiddling was right at the place it wasn’t needed, concessional contributions caps.
The Government moved to defer its promise allowing those over 50, with a super balance of less than $500,000, to contribute $50,000 a year of concessional contributions without incurring excess contributions tax.
From its introduction in 2006, the limit has fallen from $100,000 to $50,000 in 2009, and will now stand at $25,000 from 1 July 2012 until 30 June 2014.
Anyone over the age of 50 considering a contribution above $25,000 will need to do it before the end of June this year.
Everyone else needs to be aware of these changes to rules for the next two years, as it will come as no surprise to see many caught unaware, and then face excess contributions tax as a result.
The other hit came as a higher superannuation contributions tax, rising from 15% to 30%, for those with assessable earnings over $300,000.
This change may not garner much sympathy and it doesn’t impact a large amount of people, but earning over $300,000 doesn’t automatically mean it’s an ongoing working wage.
Breaching the $300,000 could be the result of combining a one off asset or business sale with investment earnings, reportable super contributions and employment income.
Attempting to put the proceeds into superannuation means the person is instantly hit with a higher level of tax, after they’ve already paid tax on those earnings.
Unfortunately, many people remain sceptical of superannuation, while many others misunderstand it all together.
While it still remains the best tax structure to save for retirement, continually moving the goal posts will continue to undermine confidence in the system.
People are living much longer than they used to and they often underestimate how much money they’ll need, Governments need to be mindful of this when making ongoing changes to superannuation.
