Financial Newsletter Sunshine Coast

Welcome to Unique Financial Partnerships, keeping you up to date with all financial planning, self managed superannuation funds, tax minimisation, life insurance, on the Sunshine Coast and around Australia.

The information in this newsletter is current at the time of printing. Contact us for updates.

Budget 2009 snapshot

-+ Concessional super contribution caps reduced
-+ Temporary reduction in government co-contribution -
+ Promised tax cuts delivered
-+ Reductions to the Private Health Care Rebate -
+ Age Pension age will increase to 67 by 2023 -
+ Increases to social security payments
-+ Pension taper rate increased to 50 cents for singles
-+ First Home Owners Grant extended for six months -
+ Paid parental leave introduced from 2011

What are the changes to the superannuation contribution caps?

Reduction of concessional contribution cap

From 1 July 2009, the government will reduce the concessional
(pre-tax) contributions cap for those aged under 50 in the
financial year to $25,000 pa (indexed). This is down from
$50,000 pa for this financial year. As this change does not apply
until next financial year, investors have until 30 June 2009 to
make the full contribution for this financial year.

The transitional contributions cap (available to individuals aged
50 and over until 2012) will be reduced from $100,000 pa to
$50,000 pa (not indexed).

Those investors who currently have a salary sacrifice or
transition to retirement strategy in place, or who are selfemployed
and make personal deductible super contributions,
should speak to their financial adviser to discuss whether
they need to review their arrangements or consider boosting
concessional contributions this financial year.

The reduction to these caps means that, in future financial
years, investors will need to be more careful to avoid exceeding
their concessional contribution cap and incurring hefty excess
contributions tax.

Some investors may also need to revisit their strategy and
consider making smaller contributions over a longer time frame
to ensure their retirement goals can be met.
Your financial adviser can provide detailed information on your
personal situation.

Future changes to the non-concessional cap

The cap on non-concessional (after-tax) contributions will
remain at $150,000 pa for the 2009–10 financial year. In future,
this cap will be calculated as six times the level of the indexed
concessional contributions cap. There has been no change to
the ‘bring-forward rule’, so investors are still able to make nonconcessional
contributions of $450,000 over three financial years.

What about the government co-contribution?

While eligibility for the government co-contribution remains
unchanged (income of up to $60,342 pa), from 1 July 2009
there will be a temporary reduction in the maximum cocontribution
– down from $1.50 to $1.00.
This means that if a person earning $30,342 pa or less makes
a $1,000 after-tax contribution to super, the government will
co-contribute $1,000, rather than the current $1,500.
After three years, the government plans to lift this contribution
to $1.25 in 2012–13 and 2013–14, returning to the full $1.50
co-contribution in 2014–15.
Despite these changes, the government co-contribution
remains an attractive scheme. For example, a person earning
$40,000 who contributes $1,000 to super ($685 after tax at a
marginal tax rate of 31.5%), would be eligible for a cocontribution
of $678, making a total net super contribution of
$1,363. However, if they salary sacrificed the same amount to
super, their net super contribution would be just $850 (after
contributions tax is applied).

Will there be any changes to transition to retirement strategies?

Despite many rumours, no changes to pre-retirement
pensions were announced. However, the reduction in the
amount that can be salary sacrificed to super (due to a drop
in the concessional contributions cap) could affect this
strategy.
Your financial adviser can provide more detailed information
on your personal situation.

Download the complete update in PDF format. 250KB (Opens in a new window)

Download Futuro Flash- June 2009- SOME HIGHLIGHTS FROM THE 2009 FEDERAL BUDGET ANNOUNCEMENT.pdf

Disclaimer
All representations and information contained in Futuro in Focus are made in good faith and are believed to be correct at the time of preparation. Articles are of a general nature and they do not purport to be specific investment advice. Individual needs or other considerations have not been taken into account, thus information contained herein should not be relied upon as a substitute for detailed advice. Futuro Financial Services will receive fees or brokerage from the provision of advice or placement of investments. You may, by contacting our Privacy Officer on 07 3018 0400 or by writing to Futuro Financial Services Privacy Officer GPO Box 942 Brisbane QLD 4001, request not to receive further editions of Futuro in Focus.