Superannuation Changes

Salary Sacrificed Superannuation count towards your Adjusted Taxable Income (ATI) as Income in Certain Circumstances

Up to 30 June 2009, where a person elected to salary sacrifice a portion of their income to superannuation, the sacrificed portion was not treated as part of their assessable income for some Federal Government benefits.
The definition of income for eligibility for Government support has been amended from 1 July 2009 to include certain salary sacrificed contributions to superannuation. This may affect eligibility for:

• Income Support Payments (prior to Age Pension age),

• Family Assistance,

• Child Support,

• Financial and retirement savings assistance delivered through the taxation system,

• Government co-contributions.

For example, prior to 1 July 2009 a person could be eligible for the Government Co-contribution by reducing their income below the limit ($60,342 for the 2008/2009 financial year) and making contributions from their after tax income. From 1 July 2009, salary sacrificed contributions will count towards the Adjusted Taxable Income when determining eligibility for the Co-contribution.

Change to Contribution Limits

Concessional Contributions

The Federal Government has announced a reduction in the amount of Concessional Contributions that a member can make during a financial year. Concessional Contributions are contributions to a superannuation fund for which a tax deduction can be claimed. These are generally contributions made by an employer (e.g. Superannuation Guarantee, salary sacrifice). Please note:

• Where a self employed person claims a tax deduction for personal contributions, these are treated as Concessional Contributions,

• Where an employer deducts amounts from your after-tax salary and remits them to a superannuation fund on your behalf, they are classified as “Non-Concessional” Contributions. Salary Sacrifice contributions are from your pre-tax salary and are therefore treated as Concessional Contributions.

For the year ending 30 June 2010, the limit for members under age 50 years is $25,000 (reduced from the previous level of $50,000). This limit is subject to indexation and is therefore likely to increase in subsequent years.

For members aged 50 years and over (including people who turn 50 during the financial year) the limit is for the year ending 30 June 2010 is $50,000 (reduced from the previous level of $100,000).

This is a transitional limit and therefore will not be subject to indexation. The Government has stated its intention that the lower (under age 50 years) limit will apply to all members irrespective of their age, from 1 July 2012.

Where a person makes contributions in excess of these limits, the amounts in excess of the limit will be subject to taxation at a rate of 31.5%.

Non-Concessional Contributions

These are contributions for which a tax deduction cannot be claimed, which are generally contributions that a person makes from their after-tax income.
The limit for these contributions has not been changed, it remains at:

• For members under age 65 years, $150,000 during a financial year, or $450,000 in one year where no further contributions can be made for the remaining two years,’

• For members aged 65 and over, contributions of up to $150,000 can be accepted providing that the member is “gainfully employed” (worked at least 40 hours in a period of 30 consecutive days during the year in which the contribution was made).

Any single contribution in excess of these limits cannot be accepted and will be refunded. Where contributions are made to more than one fund that when combined exceed the limit, additional taxation may be payable. Please refer to the AMIST Super Product Disclosure Statement (available at www.amist.com.au or by phoning 1800 808 614 8am-8pm EST) for full details.

Reduction of the Co-Contribution

The Federal Government has announced a temporary reduction in the rate of the Co-Contribution payment from 1 July 2009.

For the previous financial year, people eligible for the maximum Co-contribution received $1.50 for every $1.00 worth of contributions that they made from their after tax income (on contributions of up to $1,000). From 1 July 2009, the maximum Co-contribution will be $1.00 for every $1.00 contributed from after tax income (on contributions of up to $1,000). The Government’s current intention is that the Co-Contribution will remain at the current level until 30 June 2012. It is proposed that it will be increased to:

• $1.25 for every $1.00 of after-tax income contributed, from 1 July 2012, and

• $1.50 for every $1.00 of after-tax income contributed from 1 July 2014.

AMIST Super will keep advise members of details of the Co-contribution limits with the annual member statement mail out and on our website, www.amist.com.au.

Reduced Minimum Payments from Superannuation Pensions

Superannuation Pension members who are members of an account based pension (such as AMIST Pension) are required to receive a minimum amount of their account balance as a pension each year, based on their age. In February 2009, due to the effects of the Global Financial Crisis, the Federal Government relaxed this requirement, by reducing the minimum pension payments by 50%.

For example, a member aged 65 or less, who had been required to receive at least 4% of their pension balance as pension payments was only required to receive a minimum of 2%.

The Government announced that this relief will be extended to cover the 2009/2010 financial year. The current intention is that from 1 July 2010 the minimum pension payments will revert back to 100% of the published minimums.

For more details please refer to the AMIST Pension Product Disclosure Statement available at www.amist.com.au or by calling 1800 255 521.

Portability of Superannuation between Australia and New Zealand

It was announced in the Federal Government’s 2009 Budget that in principle agreement has been reached between the Governments of Australia and New Zealand regarding the portability of superannuation benefits between the two countries.

The date of effect, and details of how this will work, is currently under negotiation. AMIST Super will provide details on our website www.amist.com.au as soon as they are advised, and in the next available newsletter to members.

Lost Superannuation Accounts

Currently, superannuation funds are required to report to the Australian Taxation Office, details of members who the fund is no longer able to contact. For AMIST Super a member is lost where we have sent mail to the member and it has been returned indicating that the member is no longer at that address. We are also required to report details for members where they have not made a contribution for over five years.

The detail of these member accounts is stored on the ATO’s Lost Member Register. You can search the Lost Member Register at any time to locate superannuation accounts that were reported by AMIST Super (or any other funds) by phoning the ATO on 13 28 65 or at the “Super Seeker” section of their website www.ato.gov.au. If you have super with other funds that you had forgotten about, you may wish to transfer it into your AMIST Super account!

If when you reach age 65 we have not received a contribution for you in the last two years and we are unable to contact you, we are required to transfer your entitlements to the ATO  or where you die and we are unable to make payment to a dependent, personal legal representative or non-dependent.
The Government proposes that from 1 July 2010, the following additional requirements will apply to members who are classified as lost:

• Any account classified as lost and has a balance of less than $200 must be transferred to the ATO, and

• Any account that has been inactive for five years and there are insufficient records to identify the owner, must be transferred to the ATO.

At the time of writing the Government has not advised the criteria for “insufficient records to identify the owner”. We will provide members with final details of this requirement prior to the intended commencement date.

Change to Minimum Age Pension Age

The Government has advised that it intends to increase the minimum age pension eligibility age from 65 years to 67 years from 1 July 2023.

The superannuation industry is opposed to this change, and various lobby groups within the industry are making representations to the Government regarding this change.

AMIST Super members will be advised of any details of this change as they are released, in future communications.

Temporary Residents

People working in Australia under a temporary resident Visa are entitled to claim payment of their superannuation entitlements where their Visa has expired and they have permanently departed Australia.

To be eligible you must be the holder of a specific class of Visa. Please contact the Australian Taxation Office (ATO) on 13 10 20 or at www.ato.gov.au for details. Please note that residents of New Zealand are not eligible for release of superannuation under the temporary resident provisions.

Details of how to claim your benefit can be obtained from the ATO website section titled “Temporary Residents - Departing Australia” or by contacting the ATO on 13 10 20.

From April 2009...

If you are working on a temporary resident Visa and have not claimed your superannuation from AMIST Super within six months of the expiry of your visa or your departure from Australia, AMIST Super is required to transfer your benefits to the ATO. Where this occurs, you will need to claim your benefits directly from the ATO.

Please note your account balance with AMIST Super will automatically be transferred to the ATO soon after the six months has expired. You will not receive an Exit Statement from AMIST Super and no information will be sent to you to confirm that the money has been transferred to the ATO.

Restriction on payment to Temporary Residents

If you are a Temporary Resident you may only claim payment of superannuation benefits under the following circumstances:

• Departing Australia Permanently,

• Permanent Incapacity,

• Death.

If none of these conditions are met, the money must either remain with a superannuation fund or transferred to the ATO (see above).