Minister for Superannuation, Bill Shorten has confirmed that the budget on May 8 shall introduce significant changes to tax on superannuation contributions.
Currently concessional (tax deductible) contributions are taxed at 15%.
Proposed changes for the budget on May 8 are that high income earners shall pay 30% (i.e. double the tax rate) on these same contributions.
If your taxable income (likely to be subject to various tests and add backs) is lower than $300,000 then these proposed changes should not effect you.
If you are one the 128,000 taxpayers (see reference below) with taxable income over $300,000 then your concessional superannuation contributions shall be taxed at twice the current rate (i.e. shall now be 30%). Provided the proposed changes are introduced.
Benefits of wealth structuring and tax planning…
Utilising tax thresholds, corporate and other entities, combined with maximising superannuation contributions has been a very effective way of reducing your income tax. This shall continue to be the case.
This can provide significant tax savings to those with a taxable income over $37,000. From this point tax is generally halved, provided the contribution does not exceed the annual contribution cap (currently $25K for those under 50, $50K for those over 50 – conditions apply and law changing).
The benefits get better as taxable income exceeds $80,000, and again as marginal tax rates increase again at $180,000.
Due to the above proposed changes, if you fall into the above category of earning over $300K p.a., then consideration of investing additional funds into another tax effective structure may be a viable alternative. This would depend on the facts of your own personal situation.
Retaining more profits in a corporate environment may also provide tax benefits, particularly if you approach the new $300K income level.
Watch this space, as more carve outs in superannuation are anticipated as the Gillard government pursues more tax revenue.
Full article is here http://www.smh.com.au/opinion/political-news/super-slug-for-high-earners-to-save-budget-1b-20120427-1xqb2.html