From 1 July 2020 there are three changes to super which will allow Australians to make additional voluntary super contributions. Changes to superannuation are predominantly aimed at helping older Australians make additional contributions. In comparison to prior years, the impact on super are minor and will mainly benefit older Australians. The budget also focused on personal tax cuts for low and middle income earners.
Here are some of the key changes announced
- People aged 65 and 66 to be allowed to make concessional and non-concessional super contributions without meeting the work test from 1 July 2020
- Extending the bring forward rule to allow people aged 65 and 66 to make voluntary non-concessional contributions of up to $300,000 in one year from 1 July 2020
- Voluntary spouse contributions can now be made for spouses aged between 70 and 74 from 1 July 2020
- Cuts for low and middle income earners: the tax rate to be reduced from 32.5% to 30% from 1 July 2024 and offset for the 2018-22 income years.
Summary of the key changes
From 1 July 2020 there are three changes to super which will allow Australians to make additional voluntary super contributions.
- Voluntary contributions – People aged 65 and 66 years will be able to make both concessional and non-concessional voluntary super contributions without meeting the work test.
- Bring-forward rule – The bring-forward rule, which currently allows those aged less than 65 years to make three years’ worth of non-concessional contributions in one year will be extended to those aged 65 and 66. This will allow these people to make voluntary non-concessional contributions of up to $300,000 in a single year.
- Spouse contributions – Members will also be able to make voluntary contributions for a spouse aged up to 74, up from the current cut-off age of 69 years.
2: Tax cuts
The income tax cuts are designed to be implemented over a five-year period with three key start dates:
- Immediately, from 1 July 2019 – An Increase to the low- and middle-income tax offset providing up to $1,080 for singles and up to $2,160 for dual income families. The offset applies to people earning up to $126,000 a year.
- From 1 July 2022 – An increase in the income tax threshold for the 19% tax rate from $41,000 to $44,000 plus an increase in the low-income tax offset from $645 to $700.
- From 1 July 2024 – A decrease in the 32.5% tax rate to 30% for Australians earning between $45,000 and $200,000, which includes 94% of tax payer.
Of course these announced measures will depend on the outcome of this year’s Federal election as to becoming legislation and implemented.
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Talal currently serves as a Non-Executive Director on the Whitlam Institute and Western Sydney University Foundation Council Board. He also serves as Chairman of First Quay Capital and Chairman of the Australian Arab Dialogue. Talal has also served on the Australia Post, Board of Sydney Ports, Macquarie University and the Western Sydney Area Health Service and the Chairman of the Department of Foreign Affairs and Trade; Council of Australia Arab Relations. In an executive capacity, Talal spent 10 years at PwC as a director and strategist, and at investment firm Babcock & Brown in the Corporate Finance Group and later in the Technical Real Estate Division. Later Talal held leadership positions in Better Place Australia, Platinum Hearing and Star Transport Australia.