Changes you need know for 2014/15 Financial Year

Centrelink

Account Based Pensions or Income Streams that are established post 1 January 2015 will be deemed as financial investments for Centrelink purposes. Previously Account Based Pensions were concessionally assessed, with the income generally not being counted towards Centrelink income test calculations.

All Account Based Pensions established prior to 1 January 2015 and the recipient is receiving an eligible income support payment will be grandfathered under the old rules.

Therefore, you must be very careful when commuting / stopping an Account Based Pension post 1 January 2015.

Two effective strategies leading up to 1 January 2015 may be restarting an Account Based Pension or adding a reversionary beneficiary. A number of Super Funds would have had a significant rise in account balance due to the market increasing. The higher account balance can often lead to a higher deductible amount with Centrelink and therefore enable you to withdraw a greater amount as a pension from super without it being counted for Centrelink.

Adding a reversionary beneficiary (where appropriate) will extend grandfathering status of the pension beyond the primary beneficiary’s death.

Commonwealth Seniors Health Care Card

The Commonwealth Seniors Health Care Card is available to people who are over Age Pension age but not receiving Age Pension. This card is income tested only and requires a single person to have income less than $50,000 and a couple less than $80,000.

Currently any pension income withdrawn from superannuation is not counted towards the Commonwealth Seniors Health Care Card. This means that individuals with assets well above $1 million

From 1 January 2015 it has been proposed that pension income will deemed for eligibility purposes.

Aged Care

From 1 July 2014 Aged Care reforms will take place which will result in many new residents being charged higher Aged Care fees.

The changes will affect people with who receive income above $24,731 (individual), $24,263 (couple separated due to illness), $38,344 (couple living together combined income).

Superannuation

People aged 49 and over on 30 June 2014 concessional contribution (employer, salary sacrifice and tax deductible contributions) will be $35,000. Everyone else will have a concessional contribution limit of $30,000.

Non-concessional contribution cap will increase to $180,000. This means people under age 65 can utilise the ‘bring forward’ provisions and contribute up to $540,000 over a rolling three year period.

Compulsory employer contributions will be increased from 9.25% to 9.50%. The rate of 9.50% will remain in place until 30 June 2018.

Insurance held inside super from 1 July 2014 must meet the SIS Act conditions of release. This means you will no longer be able to hold TPD ‘own occupation’ policies, trauma cover or any income protection benefits that provide ancillary benefits inside the superannuation environment.

Tax

A budget deficit tax of 2% will be levied on individuals who have taxable income over $180,000. This levy may be able to be avoided from negative gearing, contributing more money pre-tax inside super.

With the Medicare Levy also increasing from 1.5% to 2%, people earning over $180,000 during the 2014/15 Financial Year will essentially incur 49% tax.

More About -- > Thomas Jacks

Thomas Jacks BCom (Acc), SMSF SpecialistTM, Adv. Dip F.S. (FP)
“I want to be able to assist clients with their investment and retirement planning by providing real strategy advice. It’s my aim to not only help my clients but to educate them by addressing the entire picture” Google Plus