1. Changes to the tax exemption for earnings on superannuation assets supporting income streams
The Government has said it will ensure that members of defined benefit funds will be equally impacted by this change as members of accumulation funds. This will be achieved by calculating a notional earnings for each year a defined benefit member is in receipt of a concessionally taxed superannuation pension.
The measure grandfathers the CGT treatment of existing assets supporting income streams until 1 July 2014. This will cause the CGT treatment of assets supporting income streams to have a three tiered structure over the next 10 years so that for:
- assets that were purchased before 5 April 2013, the reform will only apply to capital gains that accrue after 1 July 2024;
- assets that are purchased from 5 April 2013 to 30 June 2014, individuals will have the choice of applying the reform to the entire capital gain, or only that part that accrues after 1 July 2014; and
- assets that are purchased from 1 July 2014, the reform will apply to the entire capital gain.
2. Increasing the concessional caps for certain superannuation members
- From 1 July 2013 taxpayers aged 60 and over will have a $35,000 cap; and
- From 1 July 2014 taxpayers aged 50 and over will have a $35,000 cap.
The general concessional cap is expected to reach $35,000 by 1 July 2018.
3. Reform of the Excess Contribution Tax treatment of excess concessional contributions.
The result of these changes is that an excess concessional contribution will be taxed in the same way that a non-concessional contribution would have been taxed.
4. Council of Superannuation Custodians
The Council will be responsible for assessing future superannuation policy changes against principles of certainty, adequacy, fairness and sustainability. The Council will provide an annual report to be tabled in Parliament.
5. Extending normal deeming rules to superannuation account based income streams
From 1 January 2015 the standard pension deeming arrangements will apply to new superannuation account-based income streams assessed under the pension income test rules.
All products held by pensioners before 1 January 2015 will be grandfathered indefinitely and continue to be assessed under the existing rules for the life of the product so no current pensioner will be affected, unless they choose to change products.