1. Reduction in concessional contributions cap
The concessional contributions cap will be reduced from $50,000 to $25,000 with effect from 1 July 2009. This cap will continue to be indexed. The transitional cap for concessional contributions for those aged 50 years and over will also be reduced, from $100,000 to $50,000. This reduced cap will apply for the 2009/10, 2010/11 and 2011/12 financial years, after which individuals aged 50 and over will revert to the lower $25,000 cap (indexed). The transitional cap is not indexed.
The non-concessional contributions cap will remain at $150,000 for the 2009/10 financial year, and will only increase when the new lower $25,000 concessional cap is increased by indexation. Going forward, the non-concessional contributions cap will be calculated as six times the level of the (indexed) concessional contributions cap. It is expected that the bring-forward provisions will continue to allow eligible individuals to make non-concessional contributions of up to $450,000 over a three-year period.
The existing grandfathering arrangements that apply to certain members of defined benefit schemes in relation to the concessional contributions cap will continue. These arrangements will also be extended to certain persons who were members of defined benefit schemes on 12 May 2009.
2. Temporary reduction in the Government superannuation co-contribution
The Government will temporarily reduce the matching rate and maximum co-contribution that is payable on an individual’s eligible personal non-concessional superannuation contributions, with effect from 1 July 2009.
The superannuation co-contribution matching rate will reduce from 150 per cent to 100 per cent for contributions made in the 2009/10, 2010/11 and 2011/12 financial years, and to 125 per cent for contributions made in the 2012/13 and 2013/14 financial years.
The maximum co-contribution payable will be reduced to $1,000 for contributions made in the 2009/10, 2010/11 and 2011/12 financial years, and to $1,250 for contributions made in the 2012/13 and 2013/14 financial years.
The co-contribution matching rate and maximum co-contribution payable will return to 150 per cent and $1,500 for contributions made in the 2014/15 and later financial years.
The co-contribution income thresholds will continue to be indexed. No changes were announced in relation to other eligibility requirements for the co-contribution.
3. Minimum drawdown on account-based pensions
The Government will halve the minimum drawdown amounts on account-based pensions for the 2009/10 financial year. This extends the drawdown relief provided by the Government for the second half of 2008/09. This change is intended to assist pension account balances to recover from capital losses associated with the global recession.
4. Small and insoluble superannuation accounts
Superannuation providers will be required to transfer certain lost superannuation accounts to unclaimed monies, with effect from 1 July 2010. Superannuation providers will be required to transfer lost accounts with balances less than $200 (small accounts), and those which have been inactive for a period of five years and have insufficient records to identify the owner of the account (insoluble accounts).
Former account holders will be able to reclaim their money from the Australian Taxation Office at any time.
5. Capital gains tax — extension of capital loss roll-over for complying superannuation fund mergers
The Government has enhanced the optional capital gains tax loss roll-over for complying superannuation fund mergers announced on 23 December 2008. The roll-over will be extended by one year to 30 June 2011 so that superannuation funds will have more time to use the rollover.
The measure will now also apply to mergers involving pooled superannuation trusts where the continuing entity has at least five members and to mergers involving the complying superannuation business of life insurance companies.
The measure will permit merging superannuation entities in a net capital loss position to elect to roll over assets with accrued capital gains as well as assets with accrued capital losses. In addition, the rollover will be expanded to permit the transferring superannuation entity’s previously realised net capital losses to be transferred to the continuing superannuation entity and the rollover or transfer of revenue losses to the continuing entity.