Changes to superannuation in 2014/2015 – are you up to date?

Print This Post A A A

Are you across all of the changes that have occurred to superannuation in the 2014/2015 financial year? There are a few key changes that every SMSF trustee should know about for the new financial year, including increases to the super guarantee, contribution caps, the bring forward rule, ATO penalties, and changes to insurance within an SMSF.

Increase in super guarantee

The rate at which employers pay superannuation has increased from 9.25% to 9.50%. It will be frozen at this rate until 1 July 2018.

Increase in thresholds of contribution caps

There are changes to both the concessional and non-concessional contribution caps. Pre-tax contributions, or the general concessional cap, has increased to $30,000 from a previous limit of $25,000.

However, if you are a person who was 49 years of age or older as of June 30, you can take advantage of a higher concessional cap of $35,000. In the previous financial year, trustees were only able to access a higher threshold at 59 years of age or older.

^ $35,000 for those 49 or over on 30/6/14

In the new financial year, the non-concessional cap has increased to $180,000.

The ‘bring forward’ rule

Under the bring forward rule, persons under 65 can effectively make three years of non-concessional contributions in the current year. With the increase in the non-concessional cap to $180,000, the maximum amount that can be contributed under the rule is now $540,000.

To avoid penalties, it is important to note that if you activated the ‘bring forward’ provisions during the 2013/2014 year – by contributing more than $150,000 to  non-concessional contribution – you are still under the old cap of $450,000.

ATO penalties

The ATO now has increased powers to regulate superannuation funds. These penalties are generally comparable to the severity of the rule violation, and can therefore range widely. Depending on the SMSF type, penalties may also be applicable to every trustee within a fund, so the fines can be produced in multiple amounts.

Insurance policies

From 1 July 2014, an SMSF will only be able to hold insurance for a member if it aligns with a ‘condition of release’. Conditions of release may relate to life insurance, a terminal illness benefit, or temporary incapacity benefits, etc. It is important to check if your insurance policies do align with these conditions of release outlined by the ATO.

Insurance like trauma, or income protection for example, might not fall under the condition of release from 1 July. However, if an SMSF fund held an insurance policy prior to July 1, that policy will be grandfathered into the future. See Tony Negline’s article for more details.

Important: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. Consider the appropriateness of the information in regards to your circumstances.

Follow the Switzer Super Report on Twitter

Also in the Switzer Super Report:

Also from this edition

View More Articles