Tips for Superannuation
The 2015 Federal Budget released in May has introduced a number of changes affecting both employers and their staff. To help you understand the announcement, Hostplus, your dedicated industry super fund, has provided an overview of the key areas that may affect you and your workers.
Superannuation
Treasurer Joe Hockey took the opportunity during his speech to re-iterate ‘There will be no new taxes on superannuation under this Government’ as well as providing reassurances to ‘…all Australian workers they can have confidence in their retirement plans’. Mr Hockey also announced that from 1 July 2015, the Government will expand access to superannuation for people with a terminal medical condition. Currently, patients must have two medical practitioners certify that they are likely to die within one year to gain unrestricted tax free access to their superannuation balance. The Government will now change this period to two years to give terminally ill patients earlier access to their superannuation.
The Government has also made a commitment to reducing red tape surrounding the estimated $16 billion in lost and unclaimed super. This is to be achieved by removing redundant reporting requirements and streamlining administrative processes in place to re-unite individuals with their lost funds. By simplifying this process it is hoped that working Australians will benefit from increased account balances and ultimately a larger retirement nest egg. The new measures are set to come into effect from 1 July 2016.
Employment and Vocational Education
$1.2 billion has been pooled into a single set of wage subsidies to encourage employers to hire job seekers from demographics prone to long-term unemployment.
From 1 November 2015 eligible employers will receive up to $6,500 if they hire: an eligible young job seeker under 30 years of age; an indigenous job seeker; a parent returning to the workforce; or a long-term unemployed job seeker.
In a related initiative, eligible employers may receive up to $10,000 over a 12 month period if they employ and retain an older worker over 50 years of age.
An important change to note for employers of working holiday visas: A flat income tax rate of 32.5% will apply to all earnings up to $80,000. The tax free threshold of $18,000 will no longer be available to temporary residents as of 1 July 2015.
Small Business
A significant investment has been made within the small business sphere with a $5.5 billion package introduced to assist small businesses to ‘grow, invest and employ’.
This package features a number of key changes including a reduced tax rate for businesses with an annual turnover of less than $2 million.
From 1 July this year, small businesses will see a reduction in the tax rate from 30% to 28.5% with a further discount of 5% (up to $1,000) for unincorporated businesses. In addition, businesses with a turnover under the $2 million threshold can make immediate deductions for all business related asset purchases under $20,000 from 12 May 2015 through to 30 June 2017.
Changes to paid parental leave
From 1 July 2016, individuals will no longer receive government payments for Paid Parental Leave (PPL) in excess of the maximum PPL benefit (equal to 18 weeks at the national minimum wage). These changes are in response to so called “double dipping” whereby some individuals were claiming benefits from both the government and their employer.
Infrastructure
Tourism in the north of Australia is expected to benefit from the introduction of a $5 billion Northern Australia Infrastructure facility.
The facility will provide concessional loans from 1 July 2015 for the construction of ports, railways, pipelines, water infrastructure and electricity generation in both the Northern Territory and North Queensland.
There will also be $26.2 million (including $6.9 million in capital funding) provided to establish permanent border clearance services at both Townsville and Sunshine Coast airports to support regular international arrivals. In addition, the Government has also announced it will provide $499 million for economic infrastructure projects in Western Australia. This has been provided to assist the state following the downturn in the resource sector.
Beyond the workplace there were several key initiatives likely to have widespread influence across a number of sectors.
Health
Anticipated cuts to the Pharmaceutical Benefits Scheme (PBS) failed to materialise in the 2015 budget. Instead, the Government has announced expected savings of approximately $250 million as a result of restructured pricing for a number of drugs on the scheme.
Several new medications for the treatment of multiple sclerosis, melanoma and breast cancer will also be added to the PBS roster.
An amount of $26.4 million is to be provided over a period of four years to improve immunisation coverage and reduce the occurrence of vaccine preventable diseases in Australia. This funding will extend into increased data collection across all states and territories, community awareness campaigns and incentives to health care providers to provide catch up immunisations to children who are yet to be immunised.
This funding dove-tails with the ‘No Jab No Pay’ policy whereby parents who refuse to immunise children will lose access to government benefits.
National Security
$31 billion in defence funding will be utilised to provide Australia’s military with upgraded technology and equipment. An additional $450 million is set to be invested into increased intelligence capabilities including $131 million for required upgrades to the telecommunications sector for metadata retention. Airports around the country will see the introduction of biometric screening gates and all major international airports will have counter-terrorism units present in response to the rising threat of violence.
The information in this document is general in nature and does not consider any of your objectives, financial situation or needs. Information contained in this article is based on information available at www.budget.gov.au. Before acting on this information, you should consider obtaining advice from a licensed financial adviser and consider the appropriateness of this information, having regard to your particular investment needs, objectives and financial situation. You should obtain a copy of the applicable Hostplus Product Disclosure Statement (PDS) available at www.hostplus.com.au and consider the information contained in the PDS before making any decision about whether to acquire an interest in Hostplus. Issued by Host-Plus Pty Ltd ABN 79 008 634 704, AFSL 244392 as trustee for the Hostplus Superannuation Fund ABN 68 657 495 890, RSEL No. L0000093, MySuper No. 68657495890198, RSE No. R1000054.
