Federal Budget 2010-11

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

The Federal Budget delivered on 11 May 2010 builds on a number of changes to super announced by the Government on 2 May 2010.

The proposed changes initially announced as part of the response to the Henry Review include:

  • Gradually increasing the Superannuation Guarantee (SG) from 9% to 12%, by 2019-2020 (starting 2012-2013). This change is designed to improve Australians' retirement incomes by ensuring more money is put towards their superannuation.
  • Increasing the SG age limit from 70 to 75 from 2013-2014. This means an increase in the number of people who are eligible to receive super guarantee contributions.
  • Introducing a new Government superannuation contribution of up to $500 for low-income earners (individuals with adjusted taxable incomes of up to $37,000) commencing in 2012-2013 and first paid in 2013-2014. This measure is aimed at improving the retirement savings of people earning a lower income by ensuring no tax is paid on SG contributions.
  • Increasing the concessional contribution limit to $50,000 for people aged 50 and over who have account balances of less than $500,000 from 2012-2013. This provides the opportunity for people over 50 (with a $500,000 or less balance) to boost their super in the lead-up to retirement.

At the same time, the Government confirmed that they had no intention of aligning the preservation age to the Age Pension eligibility age.

The 2010-11 Federal Budget confirmed these changes and added some more proposed changes to superannuation, including:

  • maintaining the Government co-contribution payment at a matching dollar for dollar figure (up to $1,000) instead of returning to pre-1 July 2009 levels as previously announced.
  • freezing the eligible income levels for the co-contribution for the 2010-2011 and 2011-2012 financial years. Currently the maximum co-contribution is $1,000 a year if your total income is less than $31,920 a year. The co-contribution reduces gradually, eventually cutting out where a person has total income of $61,920 or more. These thresholds will be maintained for the next two financial years and will not be indexed (as would normally occur).

A number of other initiatives were announced that don't relate directly to super, but may impact individual investors. These include:

  • A 50% tax discount on up to $1,000 of personal interest earnings on bank accounts (and other eligible deposits) from 1 July 2011.
  • The option for individual taxpayers to claim a standard deduction of $500 for work-related expenses and the cost of managing their tax affairs, from 1 July 2012. This standard deduction will increase to $1,000 from 1 July 2013.
  • Increased flexibility for First Home Saver Accounts. These accounts will be made more flexible by allowing money from these accounts to be paid to an approved mortgage at the end of the minimum qualifying period (generally four years) if a house is purchased during that period.

Of course these changes remain proposals at this stage and are yet to pass into legislation. Seeking the assistance of a licensed or appropriately qualified financial adviser can help you make sense of these proposals in the context of your current situation and your needs in retirement.


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.

SA Metropolitan Fire Service Superannuation Pty Ltd ACN 068 821 750 as Trustee for the SA Metropolitan Fire Service Superannuation Scheme ABN 99 439 309 855.

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