The Federal Treasurer Wayne Swan today issued a media release regarding changes to the tax treatment of superannuation for those earning income within their funds of over $100,000.
Currently earnings in a superannuation fund are tax free once a fund starts supporting income streams (i.e. when it starts paying a pension or annuity - in most cases where a member retires or reaches retirement age). The Treasurer has flagged the Government's intention to start taxing any earnings over $100,000 per annum for each such member at the concessional superannuation fund rate of 15% from 1st July 2014. It is estimated, based on an assumed rate of return of 5%, that this would only apply to those with $2 million or more in superannuation, so it has limited application. However it is indicative of the Government's intention to continue tinkering with superannuation in order to source future revenue.
Transitional arrangements will apply to reduce the potential impact on for those who find themselves affected by these changes as at the application date. It may be, however, that action should be taken by those affected prior to the application date in order to minimise the impact of the higher rate of tax.
You can read further details of the release here, and of course if you have any questions please contact us.