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55 Market Street Sydney 2000
T: +61 2 9283 1666 | F: +61 2 9283 1866
Level 18, City Centre,
55 Market Street Sydney 2000
T: +61 2 9283 1666 | F: +61 2 9283 1866
ESV CLIENT ALERT APRIL 2010
Henry Review super top-ups
In anticipation of the release of the Henry Review of Taxation this Sunday, ESV is recommending that some clients should consider pulling forward deductible superannuation contributions.
This advice may not suit all clients. However, those of you with high taxable incomes in the 2010 year who were intending to contribute to superannuation as part of their year end tax strategy may benefit from pulling forward those contributions. You should note that there are pitfalls and we recommend you talk with us before you commit.
This Sunday, the Federal Government will release the Henry Review of Taxation. Dr Henry submitted his report to the Government before Christmas and they have been at pains since then to ensure that there have been no leaks concerning its contents. It seems that a few cracks might be appearing as the Government manages the expectations of voters.
It appears that there will be recommendations in respect of the rate of tax on superannuation contributions and we suspect that the Government is drip feeding selective proposals to the media and the professions in an attempt to gauge public support for those changes.
We understand that one proposal introduces a sliding scale of tax rates on superannuation contributions which will replace the current flat 15% rate. The new rate scale will start at 0% for the first $5,000 and will increase to 30%. The applicable rate will be linked to the adjusted taxable income of the member to whom the contribution relates.
Remember, if you are considering making a deductible contribution to your superannuation fund (either personally or through salary sacrifice) and you are younger than 50 years of age on 30 June 2010, your total concessional contributions for the year should not exceed $25,000. If you are aged 50 or over on 30 June 2010, you may contribute up to a total of $50,000 for the year. Taxpayers who contribute in excess of those contribution caps are liable to tax at a rate of 46.5% or higher on the excess.
While we would hope that these changes would not take effect until 1 July at the earliest, we will not know the introduction date until Sunday if indeed the proposal is accepted.
Please call your ESV contact if you need to discuss this matter.
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The information in this newsletter is quite general in nature and anyone intending to apply it practically to their own circumstances should seek professional advice to verify it’s individual applicability.
If you have any queries regarding the information contained in this
update please contact us.
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