* Concessional contribution caps halved from July 2009
* Government co-contribution cut by a third from July 2009
Halving of concessional contributions cap
The Government just couldn’t resist tinkering with the superannuation rules. From 1 July 2009, the annual concessional (before-tax) contributions cap of $50,000 is to be halved to $25,000. While the transitional concessional cap for over-50s of $100,000 is to be halved to $50,000, and then revert to $25,000 from 1 July 2012.
Now, before the Budget changes were announced, the concessional cap was to be increased to $55,000 from July 2009 (see, ‘Jump in contribution limits for 2009/2010 year’) so really the true halving of the cap should be $27,500.
Have the Government just done a smoke and mirrors act, or do they still intend to index the revised cap of $25,000, effective from July 2009?
Hurting those super savers who need the most help
If you have been reading the papers and watching the television news, you’d think that this Government was the defender of the middle and low-income earner. Not so it seems. The one policy in super that is the true friend of the average worker is the co-contribution scheme.
Instead of paying a tax-free co-contribution of up to $1500 for a $1000 non-concessional (after-tax) contribution to a super fund, the Government has cut the maximum benefit of this scheme by 33 per cent.
For the next three years, the maximum co-contribution payable by the Government is $1000, and from the 2012/2013 year onwards, the Goverment will pay up to $1250 for a Government co-contribution.
I explain the eligibility rules for the co-contribution in my article ‘Cashing in co-contributions: free and tax-free’.
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