Government introduces legislation to increase compulsory super to 12%

Today the Assistant Treasurer and Minister for Superannuation, Bill Shorten introduced legislation to raise the Superannuation Guarantee contribution from 9% to 12% on an incremental basis from 1 July 2013 as follows:

      •     1 July 2013        9.25%
      •     1 July 2014        9.5%
      •     1 July 2015        10%
      •     1 July 2016        10.5%
      •     1 July 2017        11%
      •     1 July 2018        11.5%
      •     1 July 2019        12%

The amendments also increase the Super Guarantee age from 70 to 75 commencing 1 July 2013.

The amendments to the Superannuation Guarantee (Administration) Act were introduced along with a package of bills that also introduced the Minerals Resources Rent Tax (MRRT). The changes to the superannuation guarantee are contingent on the passing of the MRRT bills. 

In his speech to Minister Shorten noted that the proposed legislation was in line with to the original Keating plan for a 12% compulsory superannuation contributions and accords with the Government’s intention that Australians should be able to retire on a 70% income replacement rate. 

Other tax and superannuation reforms

The Government also introduced a Bill providing for other tax and superannuation reforms. These reforms are also contingent of the passing of the MRRT bills. 

Low income superannuation contribution

This is a contribution to superannuation of 15% for concessional contributions made, up to a maximum of $500 for low income earners. The payment is in addition to any co-contributions which the person is entitles to.

Low income earners are those on adjusted taxable incomes of $37,000 or less where at least 10% of income comes from employment or business income.

Adjusted taxable income includes:
      •     taxable income
      •     adjusted fringe benefits
      •     target foreign income
      •     net investment loss
      •     tax-free pension/benefit
      •     reportable super contributions less child maintenance.

Increase to the small business instant asset write off threshold from
$1000 to $6,500

The increase should commence 1 July 2012 and is contingent on the passing of the MRRT bills (from $1,000 to $5000) and the Clean Energy Bills ($5000 to $6,500). Also depreciating assets costing more than $6,500 can be pooled together and depreciated at 15% in the year of allocation and 30% in later years. 

Small business accelerated deduction for motor vehicles

Small business will be able to immediately write off up to $5,000 of a vehicle purchased from 1 July 2012 and depreciate the remainder at 15% in the first year and 30% thereafter. 

The Entrepreneurs tax offset will be abolished but this is not contingent on the passing of the MRRT bills.