Federal Budget 2011 summary
The 2011/12 Federal Budget contains few surprises and will have minimal effect on most people. Tax benefits to individuals are modest due to the Government's desire to save money. Three of the most relevant changes are to:
- minimum payments from account-based pensions (allocated pensions);
- excess superannuation contributions; and
- concessional contributions cap for over 50s
The pension drawdown relief provided in the 2008/09 - 2010/11 financial years will be phased out, with minimum payment amounts reduced by 25% for 2011/12 and no reduction in 2012/13.
If you have excess concessional contributions (e.g. salary sacrifice) that are penalty taxed at 46.5%, you will have the option to have them taken out of your superannuation fund and assessed as income at your marginal tax rate, rather than incurring excess contributions tax.
This will only apply if you have excess concessional contributions of up to $10,000 in a particular year and is only available for breaches in respect of 2011/12 or later financial years, and only for the first year in which a breach occurs.
The $50,000 transitional concessional contributions cap will be extended permanently if you are age 50 or over with a total superannuation balance of less than $500,000. This will allow you to continue to take advantage of personal deductible contributions, salary sacrifice and transition to retirement strategies.
If you are under age 50, the concessional contributions cap remains at $25,000 (indexed in $5,000 increments) per financial year.
- fringe benefits tax on cars
- minor tax improvements for low income earners
- tax offsets for minors
- changes to family tax benefits
- reduction in Higher Education Contribution Scheme (HECS) discounts
For more detail on Budget changes, please read our Federal Budget 2011 Summary. If you would like to discuss how these changes affect your personal financial situation, please do not hesitate to call your Life Planning Solutions financial planner on (02) 9406 0150.
The team at Life Planning Solutions
