It was the first time for many years where super was not tinkered with.  Nevertheless, there are some issues trustees will need to be aware of.

SUPERANNUATION

Budget Repair Levy, 2%

This is for 3 years, commencing on 1 July 2014 until 30 June 2017, and applies on the amount of taxable income that exceeds $180,000.  To reduce the levy, if it might apply in the next year (2014/15);

- hold investments in the name of the lower income spouse

- invest in growth assets that are not likely to be realised until after 2017

- negative gear on investments

- defer tax deductions until after 1 July 2014

- make maximum super contributions

Excess Non-Concessional Contributions Refunding

A win for common sense.  Previously, Labor taxed these at the top maximum tax rate.  From 1 July 2013, an SMSF can refund excess NCC to the taxpayer plus earnings if applicable on those excess contributions.  Those earnings would be taxed at the taxpayer's marginal rate (so leave them in the Fund!).

When you ask 'how much can I put into Super', that is why we ask 'how much in total have you put in over the last three tax years?'.  At least now the excess can be withdrawn and the possibility of paying tax at 93% on NCC avoided.

Super Guarantee Rate

The SG rate increases to 9.5% from 1 July 2014 and remains at that rate until 30 June 2018.  The caps from 1 July 2014 for concessional (or tax-deductible) contributions are $30,000 for those under 50 and $35,000 for those over 50.

PENSIONS

Age Pension to Rise

Those with a birth date before 1 July 1958 are not affected by the changes to age pension age.  For those under 55, the change provides a longer accumulation period.  However, those under 55 who are considering earlier retirement need to be fully sufficient until they reach the qualifying age.  This may require greater saving measures.

Commonwealth Seniors Health Card (CSHC)

From 1 January 2015, untaxed super income will be included in the eligibility assessment for the CSHC, at the deeming rate.  This could mean fewer self-funded retirees may be eligible for pharmaceutical and health concessions.

One implication is that fund earnings may need to increase.  Also, for self-funded retirees in receipt of the CSHC but where the fund is still in accumulation phase (not paying a pension) consider commencing a Fund pension before 01/01/15.

Reset of Deeming Thresholds

The income test for government pensions will be tightened from 20 September 2017; for singles, reducing from $46,600 down to $30,000, and for couples, from $77,400 down to $50,000.  Even if the Fund pension is reduced, the greater balance of assets remaining in the Fund will be used in the Assets Test.

The message is clear, that people need to focus on being self-sufficient to ensure a comfortable lifestyle in retirement.

INVESTMENTS

It will be expected that trustees should look for higher returns.  Shares are likely to benefit from forecast economic growth and low interest rates.  The lower tax rate could mean higher dividends, which increases the attraction to and prices of the shares.

If you seek to change higher rates of return, the risk rate also increases.  Don't overpay for equities, property or bonds and consider factors other than historical returns.  Get good advice or at least another opinion or view.