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Issue 535, 15 May 2014 

In this issue:
Budget ‘repair levy’: the impact on some superannuation-related amounts 

 

Budget ‘repair levy’: the impact on some superannuation-related amounts 

With the introduction of bills to implement the temporary ‘Budget repair levy’ announced in the 2014/15 Budget, it has become clear that the levy will also increase the rate of tax paid on some superannuation-related amounts. 

The Budget announced the Government’s plan to introduce a ‘Budget repair levy’ in the form of additional income tax on Australian resident and foreign resident individuals, for the 2014/15, 2015/16 and 2016/17 financial years. The levy will be applied at a rate of two per cent of each dollar of a taxpayer’s annual taxable income over $180,000. 

The Government has now introduced a package of bills to implement the levy, including an intention to increase certain superannuation related tax rates. More specifically, where there are tax rates that are currently based on the top personal marginal tax rate (45 per cent), as well as those based on a calculation comprising of the top personal rate and the Medicare levy (which increases to 2 per cent from 1 July 2014), these will be increased by the new levy. 

This will not impact on those superannuation lump sum benefit payments that are subject to a capped rate of tax, such as lump sums received before the age of 55. This is due to the fact that, even though they form part of an individual’s taxable income, a tax offset will be available to offset any increased tax liability. 

However, the levy will impact on some (limited) types of income received by superannuation funds, and to a number of other superannuation-related benefits and amounts. 

The relevant bills can be found on the Parliament of Australiawebsite: 

Subject to the bills passing through Parliament, funds will need to ensure that their administration systems, processes, disclosure materials and member communications are updated to reflect the increased tax rates for the affected financial years. 

ASFA Action, Issue 535, 15 May 2014 

In this issue:
Budget ‘repair levy’: the impact on some superannuation-related amounts 

Budget ‘repair levy’: the impact on some superannuation-related amounts 

With the introduction of bills to implement the temporary ‘Budget repair levy’ announced in the 2014/15 Budget, it has become clear that the levy will also increase the rate of tax paid on some superannuation-related amounts. 

The Budget announced the Government’s plan to introduce a ‘Budget repair levy’ in the form of additional income tax on Australian resident and foreign resident individuals, for the 2014/15, 2015/16 and 2016/17 financial years. The levy will be applied at a rate of two per cent of each dollar of a taxpayer’s annual taxable income over $180,000. 

The Government has now introduced a package of bills to implement the levy, including an intention to increase certain superannuation related tax rates. More specifically, where there are tax rates that are currently based on the top personal marginal tax rate (45 per cent), as well as those based on a calculation comprising of the top personal rate and the Medicare levy (which increases to 2 per cent from 1 July 2014), these will be increased by the new levy. 

This will not impact on those superannuation lump sum benefit payments that are subject to a capped rate of tax, such as lump sums received before the age of 55. This is due to the fact that, even though they form part of an individual’s taxable income, a tax offset will be available to offset any increased tax liability. 

However, the levy will impact on some (limited) types of income received by superannuation funds, and to a number of other superannuation-related benefits and amounts. 

The relevant bills can be found on the Parliament of Australiawebsite: 

Subject to the bills passing through Parliament, funds will need to ensure that their administration systems, processes, disclosure materials and member communications are updated to reflect the increased tax rates for the affected financial years. 

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