Making sense of the Henry Review- what does it mean for me?
There will be four main changes to superannuation:
1. Superannuation increased to 12%
The Superannuation Guarantee Charge will increase from the current 9% up to a maximum of 12% by the 2019/20 financial year. This will happen in increments as shown below:
2.Superannuation cut-out extended to age 75
The entitlement age for the SGC will be lifted from age 70 to age 75 for workers. This change will commence for the 2013/14 financial year.
3. New concessional contribution cap for over 50’s with low super balance
Eligible workers who are 50 years of age and older who have super balances of under $500,000, will be able to make contributions of $50,000 per year (indexed annually according to Treasury).
This low balance cap applies from 1 July 2012 and effectively replaces the current transitional cap for workers aged 50 and older which expires on 30 June 2011.
4. Low income workers government contribution
From the 1st July, 2012, the Government will provide a contribution equal to 15% of concessional contributions made, up to $3,333, for low income earners with an adjusted taxable income (ATI) of up to $37,000. The maximum Government contribution paid will be $500 (not indexed).
This will mean that a person with an ATI of up to $37,000 will effectively not pay contributions tax on their SG contributions. The measure makes super contributions tax neutral for those on a 0% and a 15% marginal tax rate, as shown in the following table: