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New tax policy set to hit Australia’s wealthy

Wealthier individuals in Australia may have to pay higher taxes on their superannuation in the near future, with the government hinting that superannuation tax concessions will be reorganised to target those who are most at risk of relying on the age pension in retirement.

Industry groups are expected to be advised of the proposed changes this coming week.

Some industry observers believe that the government will tax super contributions at people’s marginal rates minus a discount to ensure everyone receives the same tax benefit on super contributions, regardless of their level of income.

At present, super contributions are taxed at 15 per cent. The presumed discount approach would reduce benefits for the country’s highest-income earners and provide larger tax breaks for low-income workers.

While setting the discount at 15 per cent would save the Australian government $5.8 billion a year, 9.5 million Australians would have to pay more in contributions tax than they do presently.

One alternative to the suspected tax changes would be to reduce the amount of money and individual can save in super. This practice would immediately decrease costs and lower the cost of tax breaks over earnings in the future because the amount of money covered when people retire would be lower.

Under current superannuation rules, people under the age of 50 can contribute up to $30,000 a year into their super accounts.

Posted on 23 February '16 by , under Tax.

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What to consider when consolidating your super

The ATO reported that 45% of working Australians were not aware that they had multiple super accounts in 2016. Having multiple super accounts is particularly common for individuals who have had more than one job. If this is you, it is important to identify and manage your super accounts because having more than one can be costly as a result of account fees from multiple funds.To combat this, you may want to consolidate your super, which moves all your super into one account. Not only does this save on fees, but it also makes your super easier to manage and keep track of.

Before consolidating your super, it is important to do the following:

Research your funds' policy
Compare your active super accounts so you can make the right choice about which one you should close. Things to assess include:

  • Exit fees
  • Insurance policies
  • Investment options
  • Ongoing service fees
  • Performance of the funds

Check employer contributions
Changing funds may affect how much your employer contributes, as some employers contribute more to certain funds. Check your current accounts to see if changing funds will affect this. Once you have selected a super fund, regardless of whether you choose a new super fund or one of your existing ones, provide your employer with the details they need to pay super into your selected account.

Gather the relevant information
When consolidating your super, you will need to have the following details ready:

  • Your tax file number.
  • Proof of identity. This could include your driver's license, birth certificate or passport.
  • Your fund's superannuation product identification number (SPIN).
  • Your fund's unique superannuation identifier (USI).
  • Details of your previous fund.

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