'Legislation Update'

What’s been passed and what’s in store for 2009

Current Changes

Superannuation

Superannuation Same-sex relationships

The Government has now passed legislation to effectively end discrimination against same-sex relationships across 68 different Commonwealth laws.

Temporary residents’ superannuation

The Government has now passed changes to temporary residents’ superannuation. The main changes in this area are:

• Increasing the withholding rate on the ‘taxed’ and ‘untaxed’ components of a Departing Australia Superannuation Payment (DASP) from 30% and 40%, to 35% and 45% respectively.

• Superannuation of a temporary resident will effectively become unclaimed monies and payable to the Tax Office:

  • Once the individual ceases to hold a temporary visa;

  • The individual has departed Australia;

  • At least six months has passed and they have not claimed their superannuation.

Taxation

Medicare Levy Surcharge

From 1 July 2008, the Medicare Levy Surcharge thresholds have increased as follows:

Note that the above thresholds were originally proposed to increase to $100,000 and $150,000 respectively.

Other

First Home Saver Accounts

First Home Saver Accounts came into effect on 1 October 2008. These accounts allow people to save for a home in a concessionally taxed environment and also receive a co-contribution from the Government.

Social Security

Deeming rates in November 2008, the lower deeming rate was reduced to 3% and the upper rate to 5%. Centrelink also conducted a revaluation of all customers’ financial investments held in listed shares and managed investments.

Economic Security Strategy Payments

Commencing 8 December 2008, seniors, families, carers and some self funded retirees will started to receive their one-off payments under the Government’s Economic Security Strategy announced in October 2008.

Changes occurring in the next 6 months

Superannuation change to income definitions for Government co-contribution

A consultation paper was released on 7 November 2008 discussing the new income definitions announced in the 2008 Federal Budget. It proposes that salary sacrifice contributions be included in the income definition when calculating entitlements to the Government co-contribution.

Whilst this change will potentially reduce or eliminate the Government co-contribution for some employees, salary sacrifice is generally still a tax effective strategy for many individuals.

Also affected are the income definitions used for tax offsets, Medicare surcharge, social security benefits and family assistance benefits. These proposed changes are discussed in the appropriate sections below. We will provide updates on all these proposed changes once the outcomes from the consultation are known.

Proposed changes to the Superannuation Guarantee late payment offset

A bill has been introduced into Parliament which should encourage employers who are liable for a superannuation guarantee (SG) to make relevant payment on a more timely basis.

There will be a tightening of the period within which an employer can make a contribution for an employee and use that contribution to offset any SG charge. There will also be a change in the general interest charge formula, with the result being that the earlier the employer pays the late SG contribution involved, the lower the general interest charge applying. This change is proposed to come into effect from the date the Bill received Royal assent.