If you haven’t reviewed your salary sacrifice arrangement for a while then two recent changes should have spurred you into action.
The first is the increase to the super guarantee (SG) rate from 1 July 2013. While the increase from 9% to 9.25% doesn’t sound like a lot, it can have a big impact. The problem is the concessional contribution caps.
Take the example of 55 year old Wilbur who earns $160,000 per annum. Before 1 July, Wilbur’s employer paid the SG amount of 9% ($14,400) and Wilbur salary sacrificed $10,600 to use his full concessional cap. From 1 July, Wilbur will need to reduce the amount he sacrifices by $400 or breach his cap.
It’s such a minor amount but without this change the ATO will include the excess $400 contribution in Wilbur’s assessable income, which will then be taxed at Wilbur’s marginal tax rate with additional penalty interest charges applying. If you have a salary sacrifice arrangement in place and are close to your contribution cap, then the increase to the SG might be enough for you to breach your limits.
The second change relates to the increase in the concessional contributions cap. This financial year, the concessional contributions cap is $35,000 for those 59 and over on 30 June 2013 and $25,000 for everyone else. The higher cap will allow an additional $10,000 to be salary sacrificed into super for those eligible.
If you feel like you need support in making your way through the uncertainties and tough times ahead, or simply have a question or want more information, please contact PJS Accountants on (07) 33903177 or click here to contact us.