Superannuation and the Henry tax review

23/03/2010

Provided by Mercer. The information in this article does not necessarily reflect the views of the Trustee.


In May 2008, the Federal Treasurer, Wayne Swan, appointed Dr Ken Henry and a panel of experts to conduct a wide-ranging review of Australia's tax system (The Henry Tax Review).

Broad public and industry consultation was undertaken and the panel submitted its findings to the Government in December 2009. The Government intends to release the report early in 2010, along with an initial response.

More pertinently from a superannuation point of view the Government asked the review panel to bring forwards its consideration of the retirement income system. The report, The Retirement Income System: Report on Strategic Issues, was released in May 2009.

The report contains a series of recommendations, a few of which were taken up by the Government in the May 09 Federal Budget.

Following is an outline of a few of the recommendations made in May 2009:

  • Keep the Superannuation Guarantee (SG) minimum rate at 9%
  • Increase the eligibility age for the Age Pension to 67. This recommendation was included in the 2009 Federal Budget. Starting from 1 July 2017, the Age Pension will increase in six month increments, reaching age 67 from 1 July 2023
  • Align the age at which people can access their super with the increase in Age Pension age
  • Improve the fairness and coherence of the existing Age Pension means tests and improve the incentives to work beyond retirement age
  • Maintain tax assistance to superannuation whilst improving the fairness of the tax concessions applied to contributions. This includes broadening access to such tax assistance and at the same time limiting generous salary-sacrifice concessions. This recommendation has already been (partly) implemented as the Government reduced the concessional (before-tax) contributions cap in the May 2009 Budget.


What does this mean for you?

The Retirement Income System: Report on Strategic Issues initiated the first of what may be many changes in the coming years.

The Henry Tax Review may result in further taxation changes which will require review of your own personal arrangements; taxation changes may result in a rethink of your short and long term savings strategies and as always you should seek advice from a licensed or appropriately authorised financial adviser or taxation specialists prior to taking any action.

This information has been prepared by Mercer Outsourcing (Australia) Pty Ltd (MOAPL) ABN 83 068 908 912, Australian Financial Services Licence #411980. Any advice contained in this document is of a general nature only, and does not take into account the personal needs and circumstances of any particular individual. Prior to acting on any information contained in this document, you need to take into account your own financial circumstances, consider the Product Disclosure Statement for any product you are considering, and seek professional advice from a licensed, or appropriately authorised, financial adviser if you are unsure of what action to take. "MERCER" is a registered trademark of Mercer (Australia) Pty Ltd ABN 32 005 315 917. Copyright 2012 Mercer LLC. All rights reserved.

 

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