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SIMPLIFIED SUPERANNUATION – CHANGES AT 1 JULY 2007

Superannuation benefits paid from a taxed source either as a lump sum or pension will be tax free when paid to people aged 60 and over.
Superannuation benefits paid before age 60 will be taxed in a similar manner as they are now.
RBLs for superannuation will be abolished.
The current concessional tax treatment of invalidity payments will be extended to the self-employed. Payment Rules
The rules for when individuals can voluntarily choose to access their superannuation will not change — that is, individuals will still be able to access their superannuation once they reach preservation age and are able to take their benefits, and from age 65 even if they have not retired.
An individual will not be compelled to draw down their superannuation once they reach a particular age. They will be free to draw on it as and when they want.
Pensions will continue to receive favourable tax treatment. However, the rules defining a pension will be simplified.
If a person chooses to take a pension, they will be able to take out as much as they like when they like, provided a minimum amount is taken each year.

Concessional deductible contributions to superannuation will be limited to $50,000 per person per annum. These contributions will be taxed at 15 per cent.
- A five year transitional period will apply for people who are aged 50 and above to allow those planning to retire soon to make concessional contributions of $100,000 a year.
Employers will be able to claim a full deduction for all contributions to superannuation on behalf of individuals under the age of 75. The Superannuation Guarantee will continue to apply only until age 70.
The personal deduction eligibility rule will be simplified by making it consistent with the rule that currently applies for the Government co-contribution.
Personal superannuation contributions from an individual’s post-tax income (known as undeducted contributions) will continue not to be taxed when contributed and may be eligible for the Government co-contribution (as currently). These contributions will be limited to $150,000 per annum.
- People under age 65 will be able to bring forward two years of contributions and make a larger contribution of $450,000.
- Transitional arrangements will apply between 10 May 2006 and 30 June 2007.
All contribution limits in the plan (except those related to transitional arrangements) will be indexed in $5,000 amounts.

The self-employed (and other eligible persons) will be able to claim a full deduction for all personal superannuation contributions until age 75.
Eligible self-employed persons will have access to the Government co-contribution scheme.

The taxation of employer ETPs will be changed to reflect the removal of the RBL system and benefits tax.
Greater use of tax file numbers will be encouraged.

The taxation treatment for lump sum benefit payments from an untaxed source will be: o For those aged 60 or over — a rate of 15 per cent will apply to the total of all payments up to $1 million and the top marginal tax rate above that amount.
- For those aged 55 to 59 — a rate of 15 per cent will apply for payments up to the low rate threshold ($140,000), 30 per cent above this amount up to the upper threshold ($1 million) and the top marginal tax rate above that amount.
- For those aged under 55, a rate of 30 per cent will apply up to the upper threshold ($1 million) and the top marginal tax rate above this amount.
Pension payments arising from an untaxed superannuation source to an individual over the age of 60 will be taxed at marginal tax rates with a 10 per cent offset. Payments to those below age 60 will be taxed at marginal tax rates without an offset (as is the case currently). Making it easier to find and Transfer Superannuation
A new standardised form will be introduced to facilitate the transfer of benefits between funds. The maximum time period in which this transfer must occur will be reduced from 90 days to 30 days.
The ATO will be more proactive in supporting the consolidation of lost member accounts.