The federal budget handed down last night has determined that the qualification threshold for the government’s superannuation co-contribution scheme will remain at the same level for the next two years.
“The minimum threshold is currently $31,920, increasing up to $61,920, and that’s gong to remain now instead of being increased over the next financial year, and it will remain for the next two years,” Centric Wealth technical research manager Anne-Marie Esler said.
“That’s not such a good thing,” she said.
In addition, the government said it has shelved plans to raise the matching rate of the co-contributions back to previous levels.
“From 2014 it was gong to be back to its 150 per cent level with a maximum contribution of $1500. But it looks like it’s going to be permanently retained at $1000 and 100 per cent,” Esler said.
Despite the changes to the co-contributions scheme, she said the effect would not be significantly detrimental for people’s superannuation.
“We have to look at the government co-contribution as a benefit anyway. It is an additional benefit where the government matches your contribution with one of their own,” Esler said.
“It still provides an incentive to make those personal concessional and non-concessional contributions into super as the government provides them with a 100 per cent contribution in return.”
In regard to other sections of the budget document, the Self-Managed Super Fund Professionals’ Association of Australia (SPAA) welcomed the greater discretion given to the commissioner of taxation in relation to excess contributions tax by way of a change to the superannuation legislation.
“Under the current system, the commissioner’s discretion can only be requested after the taxpayer has received an excess contributions tax determination,” SPAA chief executive Andrea Slattery said.
“Providing more certainty before the contribution is made will encourage more taxpayers to contribute to their retirement savings, particularly for those taxpayers who may be approaching their cap in a financial year.”
