From 1 July a number of taxation changes have come into effect. So here’s an overview.
The $25,000 concessional contributions cap has been increased to $30,000. The current caps for different ages are as follows:
The Tax Office also confirmed the resumed indexation of the concessional contributions cap, in line with the average weekly ordinary time earnings (AWOTE). However, the temporary higher cap for those aged 49 or over is not indexed and will cease when the general concessional contributions cap is indexed to $35,000.
The imminent increase will bring about a range of changes to various contribution strategies for self-managed superannuation fund (SMSF) members and APRA-regulated superannuation fund members alike, so it is important to start planning for the increase. The increase will also provide an added incentive to pay 15% tax instead of 49% and reduce taxable income.
The Medicare levy rises from 1.5% to 2% for all taxpayers, to assist with funding DisabilityCare. Employers need to install new tax rate tables into their payroll software to capture this increase.
However there is no change to the Medicare levy surcharge, which remains at a rate of 1%, 1.25% or 1.5% depending on your circumstances. This surcharge only applies when a taxpayer does not have adequate private health insurance cover and exceeds the relevant income threshold.
The superannuation guarantee rises 0.25% to 9.5%, helping taxpayers build their retirement savings. Employers are required to increase their superannuation contributions on behalf of employees to 9.5% of ordinary time earnings from July 1. The 9.5% rate will remain until June 30, 2018 after which the superannuation guarantee percentage will increase by 0.5% each year until it reaches 12% from 2022–23.Back