Last week, the Treasurer released the Intergenerational Report (IGR). The IGR is a snapshot analysis, taken every five years, of how Australia is tracking now and how it will be in 40 years time. The IGR is important to the Government’s policy agenda, because it provides the evidential basis for reform.
Meanwhile the Australian Tax Office (ATO) released its annual changes to superannuation thresholds.
These important items are summarised below:
This is the fourth IGR to be published since 2002. Like its predecessors, the 2015 IGR focusses on the three “Ps”:
1. Population. Australia’s population is expected to grow from 23.9 million to 39.7 million by 2055.
- Life expectancy at birth is expected to increase from 91.5 years (men) and 93.6 years (women) in 2015 to 95.1 and 96.6 respectively in 2055. Not surprisingly life expectancy at age 60 is expected to increase from 26.4 years (men) and 29.1 years (women) in 2015 to 31.5 and 33.3 years in 2055 (that is a long time to stretch out the super savings).
- Currently 15 per cent of the population is aged 65 or over. By 2055, this is expected to increase to 22.6 per cent.
2. Participation. Participation in the workforce for those aged 15+ is expected to decline from 64.6 per cent today to 62.4 per cent in 2055.
- The IGR also identified that currently the participation of women in the workforce is 4 per cent below New Zealand and Canada, and that increasing female participation to Canadian levels would add $25billion to GDP.
3. Productivity. Labour productivity has slowed from 2.2 per cent in the 1990s to 1.5 per cent in the 2000s. To retain and improve living standards, productivity improvements are required.
Reforms flagged in the IGR
1. Tax reform. The reliance on personal and company income tax is inefficient and other countries are reducing company tax rates.
2. Delivering Government services efficiently. This includes:
- Reform of the Federation White paper, which will review areas of responsibility for State and Federal Governments so they don’t overlap.
- Greater use of digital technology for service delivery and improved data collection.
3. Productivity improvements including:
- More investment in new infrastructure (particularly transport) and more efficient use of existing infrastructure.
- The Government will consider the findings of the Productivity Commission in relation to Competition Policy and workplace relations, and the report of the Financial Systems Inquiry.
4. Increasing participation through:
- Encouraging employers to employ older workers.
- Childcare and early learning facilities.
- Programs for the young unemployed.
Changes to super tax were not mentioned in the context of the Government’s reform agenda, other than to mention that superannuation is generally taxed at a lower rate in recognition that there are restrictions in accessing benefits and that the super system is expected to grow faster than GDP.
ATO releases 2015/16 super thresholds
The ATO has released several important rates and thresholds for 2015/16.
New super thresholds for 2015/16 are:
|Low rate threshold – 0% tax under age 60||$195,000 (up from $185,000 2014/15)|
|CGT cap amount (excluded from NCC cap)||$1,395,000 (up from $1,355,000 2014/15)|
|Untaxed plan cap (unfunded public sector super)||$1,395,000 (up from $1,355,000 2014/15)|
|SG maximum contributions base||$50,810 salary per quarter (up from $49,430 2014/15)|
|Annualised SG max base||$201,816 pa (up from $197,720 2014/15)|
|Full Government co-contribution income||$35,454 pa or less (up from $34,488 2014/15)|
|No Government co-contribution income||$50,454 pa or more (up from $49,488 2014/15)|
Employment Termination Payments
|ETP cap||$195,000 (up from $185,000 2014/15)|
|Tax free redundancy amount||$9,780 + $4,891 per completed year of service (up from $9,514 +$4,758 per year 2014/15)|
Thresholds not changing 2015/16
- SG contribution rate 9.5%.
- Concessional contributions caps: $30,000 ($35,000 if aged 49 on 30/6/2014).
- Non-concessional contributions caps: $180,000 (or $540,000 over 3 years if under age 65).
Other super changes
On 1 July 2015, preservation age increases to age 56 for those born 1/7/1960 to 30/6/1961.
If you would like to know more about how we may be able to help you plan for your future, either call on 1300 99 77 34 or email your enquiry to FinancialOptions@chan-naylor.com.au for a complementary initial consultation.
David Hasib – Director, Chan & Naylor Wealth Planning
General Advice Disclaimer
The advice provided on this article is general advice only. It has been prepared without taking into account your objectives, financial situation or needs. Before acting on this advice you should consider the appropriateness of the advice, having regard to your own objectives, financial situation and needs. If any products are detailed on this website, you should obtain a Product Disclosure Statement relating to the products and consider its contents before making any decisions.
Chan & Naylor Wealth Planning disclaim all and any guarantees, undertakings and warranties, expressed or implied, and shall not be liable for any loss or damage whatsoever (including human or computer error, negligent or otherwise, or incidental or consequential loss or damage) arising out of or in connection with any use or reliance on the information or advice in this article. The user must accept sole responsibility associated with the use of the material on this site, irrespective of the purpose for which such use or results are applied.
‘Contributed by – IOOF’.