Federal Budget 2018/19 overview
The Federal Budget for 2018/19 was announced on Tuesday 8 May, including a number of proposed changes to Super. The changes will need to be approved by Parliament before they can come into effect, and will commence from 1 July 2019 if approved.
Curious about what these changes might mean for you? We’ve summarised the highlights below:
Increased Superannuation Guarantee
In great news for working Australians, the Government has recommitted to increasing the Superannuation Guarantee (SG) from 1 July 2019, by 0.5% a year to reach 12 % at 1 July 2025.
Changes to default insurance cover
Default insurance cover will no longer be compulsory if you’re under 25, have a low balance less than $6,000 or have an inactive account that hasn’t received a contribution in 13 months. However, if you fall into any of these categories and still want the peace of mind that comes with insurance, you will still be able to opt in to keep a level of cover that suits your personal situation.
Exit fees will be removed from all super accounts from 1 July 2019. Members with a small balance of less than $6,000 will also have administrative and investment fees capped at 3% of their account balance.
Claiming personal deductions for contributions
The Government has proposed changes to the process for claiming personal deductions for super contributions. The proposed changes aim to streamline the deductions process between members, the ATO and Superannuation Funds, and allow the ATO to deny any deductions where the process has not been followed. If approved, this will become effective from 1 July 2018. Keep an eye on the ATO website for details.
More flexible work test requirements
Currently, members aged 65 to 74 need to pass a work test to make personal contributions. The new budget announcement proposes to ease this rule, allowing those with low balances ($300,000 or below) to make personal contributions for 12 months following the date that they would have no longer passed the work test.
Superannuation Guarantee opt-out for very high income earners
From 1 July 2019, high income earners who work for multiple employers and earn over $263,000 will be able to opt out of receiving SG contributions from an employer to avoid breaching the contributions cap.
Keeping you informed
We’ll keep you updated on any changes to super as they arise. If you have any questions in the meantime, you can call us on 1300 360 149 between 8am – 8pm weekdays. Or, for more information on the 2018/19 budget, visit budget.gov.au.