Facts and Figures. 2010/2011 financial year

Transcription

1 Facts and Figures 2010/2011 financial year Issued September 2010

2 Contents Tax rates 3 Tax offsets 6 Capital gains tax 7 Superannuation 9 Termination payments 19 Retirement income streams 21 Social security 25 Contact list 29

3 Tax rates Personal tax scales 2010/2011 residents and non-residents Taxable income Tax payable (residents) 1 Tax payable (non-residents) 2 $0-$6,000 $0 29% $6,001 $37,000 $0 + 15% of excess over $6,000 29% $37,001 $80,000 $4, % of excess $10, % of excess over $37,000 over $37,000 $80,001 $180,000 $17, % of excess over $80,000 $23, % of excess over $80,000 Over $180,000 $54, % of excess over $180,000 $60, % of excess over $180,000 Non-resident withholding tax Income 3 Double Tax No DTA Agreement (DTA) Franked dividends 0% 0% Unfranked dividends 15% 30% Interest 10% 10% Royalties 10% 30% Note: The above rates are general rates of withholding only; the relevant DTA may specify a different rate. Non-resident withholding tax for fund payments 4 from managed investment trusts Income year Residents of countries with effective exchange of information agreements and onwards 7.5% 30% Residents of countries with no effective exchange of information agreements 1_ Rates do not include 1.5% Medicare levy. 2_ Non-residents are not required to pay Medicare levy. 3_ Excluding distributions from property trusts. 4_ Excludes dividends (franked or unfranked), interest, royalties, foreign sourced income and capital gains or losses from assets that are not taxable Australian property. 5_ A list of countries with effective exchange of information agreements can be found in Taxation Administration Regulations 1976, Regulation 44E. 3

4 Tax rates (continued) Other tax rates Type Entity Tax Rate Super (accumulation) 15% Super (pension phase) 0% Companies 30% Insurance bonds 30% (offered by life insurance companies) Taxable income of a trust distributed to benefi ciaries that are presently entitled are taxed in the hands of the benefi ciary. Generally, if no benefi ciary is presently entitled, the trustee is taxed at 46.5%. Taxation of minors Not excepted persons and not excepted income but are Australian residents. Taxable income Tax Up to $416 $0 $417 $1,307 66% of excess over $416 Over $1,307 45% on entire amount that is not excepted income Note: $1,500 low income tax offset may be available; this increases the effective tax free threshold to $3,333. Medicare levy 2009/ and later income years 0% for taxable income/family income up to Senior Australians tax offset recipients Single $30,685 $36,100 Couple (combined) no children $44,500 $52,352 Pensioner tax offset recipients Single $27,697 $32,584 Couple (combined) no children $31,196 $36,701 Other Australians Single $18,488 $21,750 Married/defacto/sole parent $31,196 $36,701 Add per dependant child/student $2,865 $3,370 Phases in to 1.5% for taxable income/family income up to Note: A 100% exemption from the Medicare levy exists for certain prescribed persons. 1_ Medicare levy thresholds are usually confi rmed at the end of each fi nancial year. 4

5 Medicare levy surcharge 2010/2011 Additional 1% Medicare levy surcharge payable for income over Single $77,000 Base Family threshold $154,000 Families add for the second and $1,500 subsequent dependant child The Medicare levy surcharge applies where individuals and families do not have private hospital cover and where their income for surcharge purposes exceeds the relevant thresholds. Income for surcharge purposes include: > taxable income > reportable fringe benefi ts > exempt foreign employment income (if your taxable income is $1 or more) > total net investment loss and > Reportable Superannuation Contributions (*RSC) > less the taxable component of a superannuation lump sum to which the low rate cap amount ($160,000 for 2010/11) has been applied. The additional 1% rate is applied to the individual s taxable income, reportable fringe benefi ts and any amount on which family trust distribution tax has been paid. *RSC include: > Reportable Employer Superannuation Contributions (RESC) 1 are those contributions where the employee has infl uenced the rate or the amount of superannuation contributed for them and are additional to those contributions that are compulsory (such as SG, contributions made under an industrial agreement, the trust deed or governing rules of a superannuation fund, federal, state or territory law); plus > Personal deductible contributions. Fringe Benefits Tax (FBT) FBT is calculated by grossing up the taxable value of fringe benefi ts provided to the employee and multiplying this amount by 46.5%. The grossed up amount is calculated depending on the type of benefi t: Type 1 where GST input tax credits are available to the provider of the benefi t: Value of benefi ts x Type 2 where GST input tax credits are not allowed, or GST was not paid by the provider: Value of benefi ts x Reportable fringe benefits are the value of certain fringe benefi ts provided to you or your associates from your employer which exceeds $2,000 in an FBT year. Reportable fringe benefi ts are the grossed up taxable value of these benefi ts that appear on your payment summary for the corresponding fi nancial year. Note: FBT year 1 April March _ RESC is defi ned on page 15. 5

6 Tax offsets Low Income Tax Offset 2010/2011 For taxable income under $30,000, a tax offset of $1,500 is available. For income above $30,000 the tax offset reduces by 4c per dollar above $30,000, phasing out at $67,500. Senior Australians Tax Offset 2010/2011 Available to taxpayers who, as at 30 June 2011, are of Age Pension or Service Pension age, are eligible for (but may not necessarily receive) an Australian Government Age Pension, or a pension, allowance or benefi t from Veterans Affairs, were not in jail and their rebate income 1 is within the following thresholds. Maximum offset 2 Shade-out threshold Cut-out threshold Single $2,230 $30,685 $48,525 Couple (each) $1,602 $26,680 $39,496 Couple separated by illness (each) 3 $2,040 $28,600 $44,920 Mature Age Worker Tax Offset Available to individuals aged 55 years and over at the end of the income year, are residents for tax purposes and have received net income from working. If net income from working is Tax offset is Less than $10,000 5% of net income from working between $10,000 and $53,000 $500 more than $53,000 but less than $63,000 $500 is reduced by 5c per $1 over $53,000 $63,000 and above Nil Note: Net income from working is defi ned as the total assessable income that is mainly a reward for personal effort or skills less any relevant deductions plus RESC (defi ned on page 15) plus reportable fringe benefi ts. 1_ Rebate Income = taxable income + RSC (defi ned on page 5) + total net investment loss + adjusted fringe benefi ts total. Adjusted fringe benefi ts total is determined using the formula: Taxpayer s reportable fringe benefi ts total x (1 FBT rate). 2_ Offset reduces by 12.5c for every $1 above shade-out threshold. 3_ Figures are for 2009/

7 Capital gains Capital Gains Tax (CGT) Entity Acquisition date CGT method Individuals, Before 20/09/1985 No CGT trusts and 20/09/ am Choice of indexed cost base to non-complying EST 21/09/1999 September 1999 quarter, or 50% superannuation discount on capital gain funds After 11.45am EST 50% discount on Complying superannuation funds 21/09/ /06/ am EST 21/09/1999 capital gain Choice of indexed cost base to September 1999 quarter, or 1/3 discount on capital gain After 11.45am EST 21/09/1999 1/3 discount on capital gain Companies Before 20/09/1985 No CGT 20/09/ am Indexed cost base to September EST 21/09/ quarter After 11.45am EST 21/09/1999 Gain fully assessed (no discount) Notes: > for assets held less than 12 months, the full gain is taxable. > the above table outlines the basic methods for calculating capital gains. Capital gains assessments can be complex and advisers should recommend clients seek professional tax advice on such matters. 1_ Deemed acquisition date for assets held by complying super funds. 7

8 Capital gains (continued) CPI and AWOTE tables Year CPI factors AWOTE 2 Mar Jun Sep Dec Mar Jun Sep Dec _ This is the last indexation factor applicable for CGT purposes. 2_ The ABS has revised their historical AWOTE fi gures from September 1996 to June 2008 to exclude all salary sacrifi ced amounts. This revision will not affect superannuation thresholds prior to 1 July For more information on the revised AWOTE fi gures, please refer to

9 Capital Superannuation gains Contributions who is eligible to contribute to superannuation? Age of member Under 65 years Aged 65 to 69 years Aged 70 to 74 years Aged 75 years and over Eligibility to contribute Contributions can be made by the member or made on a member s behalf at any time. The member must have been gainfully employed on at least a part-time basis (ie for at least 40 hours in a period of not more than 30 consecutive days) in the fi nancial year in which they wish to make or have contributions made on their behalf personal contribution, employer contribution or spouse contribution. Alternatively, the contributions are mandated (award, certifi ed agreement or Superannuation Guarantee (SG)). The member must have been gainfully employed on at least a part-time basis (ie for at least 40 hours in a period of not more than 30 consecutive days) in the fi nancial year in which they wish to make or have contributions made on their behalf personal contribution or employer contribution. Alternatively, the contributions are mandated (award or certifi ed agreement but not SG). Generally, only mandated employer contributions (award or certifi ed agreement but not SG) are allowed. Member and employer contributions received on or before 28 days after the end of the month in which the member turns 75 can be accepted where the member meets the work test described above. Spouse contributions The contributing spouse can be of any age, the receiving spouse must be under age 65, or if 65 to 69, gainfully employed for at least 40 hours within a consecutive 30 day period in the fi nancial year in which the contribution is made. Income 1 Offset 2 is calculated at 18% of lesser of: $10,800 or less $3,000 or Spouse Contribution $10,801 to $13,799 $3,000 (Income $10,800) or Spouse Contribution $13,800 or more Nil 1_ Income = assessable income + reportable fringe benefi ts + RESC (defi ned on page 15). 2_ Maximum offset is $540. Contributing and receiving spouse must be resident taxpayers. 9

10 Superannuation (continued) Contributions caps 2010/2011 Concessional contributions (CC) cap $25,000 1 per person, per fi nancial year or $50,000 2 per person, per fi nancial year if aged 50 or over at any time in the fi nancial year. The transitional period ends on 30 June Non-concessional contributions (NCC) cap $150,000 3 per person, per fi nancial year or $450,000 4 over 3 years if under 65 on 1 July of the fi nancial year. Capital gains tax (CGT) cap $1.155 million 1 lifetime limit The following contributions are allowed under this cap: > up to $500,000 of capital gains where the small business retirement exemption has been claimed (lifetime limit and not indexed) > capital proceeds from the disposal of small business assets that are exempt from CGT under the small business 15 year exemption 5. There are no caps on amounts contributed from certain payments for personal injury. Concessional contributions The following contribution types will be included in an individual s concessional contributions cap: > Employer contributions (including SG and salary sacrifi ce) except for those contributions made to a constitutionally protected fund 6 ; > After-tax contributions for which a personal tax deduction has been claimed; > Untaxed elements of the taxable component of directed termination payments over $1 million contributed under the transitional rules for employment termination payments; > Notional taxed contributions (defi ned benefi t funds) 7 ; and > Certain allocations from reserve accounts in a super fund. 1_ Indexed to AWOTE in $5,000 increments (rounded down). 2_ Not subject to indexation. 3_ 6 times CC cap (currently $25,000). 4_ 3 times NCC cap (currently $150,000). 5_ This includes capital proceeds from the disposal of small business assets that would have been CGT exempt except: if they were pre-cgt assets, or if there was no capital gain, or where the 15 year holding period was not met because of the permanent incapacity of the person (or a signifi cant individual of a company or trust). 6_ Generally constitutionally protected funds are run by state governments for employees, or for members of the judiciary. 7_ Individuals with defi ned benefi t funds will need to request details from their fund on the amount of notional taxed contributions that will be included as concessional contributions. 10

11 Non-concessional contributions The following contribution types will be included in an individual s non-concessional contributions cap: > after-tax contributions for which no tax deduction is claimed; > spouse contributions; > amounts transferred from overseas super funds 1 (excluding the taxable amount of such transfers); > contributions made from the proceeds from the sale of qualifying small business assets unless they count towards the CGT cap (which is $1.155 million in 2010/11); and > amounts of concessional contributions in excess of the concessional contributions cap. Excess contributions > Amounts in excess of an individual s concessional contributions cap will be subject to an additional tax of 31.5%. This tax may be paid by withdrawing amounts from superannuation or by the individual personally. > Amounts in excess of an individual s non-concessional contributions cap will be subject to an additional tax of 46.5%. This tax must be paid by withdrawing amounts from superannuation. > Excess concessional contributions also count towards an individual s non-concessional contributions cap. Contributions in excess of both caps may be liable for excess contributions tax at a total rate of 93%. Preservation age Date of birth Preservation age Before 1/07/ /07/60 30/06/ /07/61 30/06/ /07/62 30/06/ /07/63 30/06/64 59 On or after 1 July Departing Australia superannuation payment rates Component Withholding tax rate Tax free 0% Taxable (taxed element) 35% Taxable (untaxed element) 45% 1_ A super fund is generally unable to accept an overseas transfer exceeding $450,000 (or $150,000 if the individual is 65 or over on 1 July of the fi nancial year in which the transfer is made) unless APRA has granted an exemption. You should check with your super provider. 11

12 Superannuation (continued) Benefits Superannuation conditions of release Release condition Retirement 1 Attaining age 65 Death 2 Terminal medical condition 2 Permanent incapacity 2 Attaining preservation age Severe fi nancial hardship a) In receipt of a qualifying income support payment for 26 weeks b) Age weeks and be in receipt of a qualifying income support payment for 39 weeks Compassionate grounds Termination of employment with an employer who had contributed to the fund Temporary incapacity 2 Former temporary resident (Departing Australia Superannuation Payment) 2 Termination of employment with standard employer sponsor where the preserved benefi t is under $200 Being a lost member who is found where the balance is under $200 Provision of a release authority for excess contributions tax Cashing restriction Nil Nil Nil Nil Nil Only as a non-commutable income stream and no lump sums a) Single lump sum between $1,000 3 and $10,000 b) Nil Only as a single lump sum not exceeding the amount determined by the Regulator a) Preserved benefi ts as a non-commutable life pension/annuity b) Restricted non-preserved benefi ts Nil Received as a non-commutable income stream 4 for a period not exceeding the period of incapacity Entire benefi t paid as a single lump sum Nil Nil The amount 5 of excess concessional or non-concessional contributions tax 12

13 Notes: 1_ Where a member has reached preservation age, retirement occurs when an arrangement under which the member was gainfully employed has come to an end and the trustee is reasonably satisfi ed that the member intends never again to become gainfully employed either part time or full time (ie for 10 or more hours per week). Where aged at least 60 but less than 65, retirement occurs when an arrangement under which the member was gainfully employed has ceased on or after the member reached age 60. 2_ Temporary residents may only use these conditions of release. Temporary residents exclude holders of retirement visas subclass 405 and 410, Australian or New Zealand citizens or permanent residents of Australia. This rule does not apply to those who have met a condition of release in the table prior to 1 April 2009, even if the benefi t is paid after this date. 3_The entire amount may be cashed if less than $1,000. 4_The benefi ts must not be paid from the member s minimum benefi ts. 5_Conditions apply. 13

14 Superannuation (continued) Tax deductions for contributions To claim a tax deduction for a contribution to superannuation, the fund must have received the contribution in that fi nancial year. Individuals For the purpose of claiming a personal tax deduction for personal contributions, eligible persons are: > self employed persons; > substantially self employed persons (if less than 10% of a person s assessable income, RESC 1 and reportable fringe benefi ts 2 are attributable to employment as an employee for the fi nancial year); and > persons who are not deriving income from an employer. This continues to include anyone who is not employed and aged 18 to 64. Those under 18 at the end of the fi nancial year cannot claim a tax deduction unless they earned income as an employee or business operator in that fi nancial year. Individuals must make personal contributions before 28 days after the end of the month in which they turn The full amount of the contribution can be claimed as a deduction. Restricted time period to give notice to super funds Generally, the individual must provide a notice by 30 June in the fi nancial year following the fi nancial year in which the contribution was made. For the 2010/11 fi nancial year this will be 30 June However, some individuals will need to notify their super fund prior to this date as their ability to claim a deduction will cease on the date: > they lodge their tax return for the 2010/11 year (year in which the contribution was made); > they cease to be a member of the fund; > the super fund trustee no longer holds all of the contributions (eg this will generally occur after any partial withdrawal); > the super fund trustee begins to pay an income stream based in whole or part on the contribution; or > the super fund trustee is provided with a request from the member to split contributions with their spouse. Employers Employers are entitled to a full tax deduction for superannuation contributions made for employees. 1_ Reportable Employer Superannuation Contributions (RESC) is defi ned on page 15. 2_ Reportable Fringe Benefi ts is defi ned on page 5. 3_ Normal work test rules apply for contributions made on or after age 65 (refer to page 9 for further information). 14

15 Co-contribution eligibility 2010/2011 An individual must meet the following criteria to be eligible for the Government co-contribution: > They make a personal after-tax contribution to their superannuation fund. > Total Income for the fi nancial year is less than $61,920. Total Income 1 = Assessable Income + Reportable Fringe Benefi ts 2 + Reportable Employer Superannuation Contributions (RESC) > At least 10% 3 or more of the person s Total Income for the fi nancial year is attributable to either or both: i_ the person engaging in activities where treated as an employee for the purposes of SG legislation. ii_the person carrying on a business. > They are not a temporary resident. > They are under 71 at the end of the fi nancial year. > They have lodged a tax return for the fi nancial year. Co-contribution entitlement Total income 4 Reduction in co-contribution Maximum co-contribution $31,920 or less No reduction $1,000 $31,920 $61,920 (Total Income $31,920) $1,000 Reduction in x co-contribution $61,920 or more No entitlement Nil The Government co-contribution entitlement is then worked out as the lesser of: > Maximum co-contribution (worked out above) and > Personal after-tax contribution made in fi nancial year x $1 5. Reportable Employer Superannuation Contributions (RESC) are amounts contributed by an employer, or an associate of the employer, for the individual s benefi t to the extent that the individual has or has had, or might reasonably be expected to have or have had, the capacity to infl uence either the size of the amount or the way the amount is contributed so that his or her assessable income is reduced (eg salary sacrifi ce). It excludes superannuation guarantee, mandated and after-tax contributions. 1_ Where self employed, Total Income is reduced by allowable business deductions. Deductible contributions to super and work related employee deductions are not allowable business deductions and cannot reduce total income. 2_ Reportable Fringe Benefi ts is defi ned on page 5. 3_ Business deductions do not reduce total income for 10% test. 4_ For the 2010/11 and 2011/12 fi nancial years, the lower and upper thresholds of $31,920 and $61,920 (respectively) will be frozen. 5_ The $1 for $1 matching rate remains indefi nitely resulting in a maximum co-contribution of $1,

16 Superannuation (continued) Super Guarantee (SG) 9% of employees ordinary time earnings (up to $42,220 per quarter for 2010/2011) is payable to a complying super fund. $42,220 per quarter equates to $168,880 per annum representing a maximum SG entitlement of $15,199. SG quarter Cut off date for SG contribution 1 July 30 September 28 October 28 November 1 October 31 December 28 January 28 February 1 January 31 March 28 April 28 May 1 April 30 June 28 July 28 August Due date for lodgement of a SG statement if not made by cut off date Superannuation member benefits taxed element in the fund Age Superannuation lump sum 1 Superannuation income stream 1 Below preservation age 20% MTR no pension offset 2 Preservation age to age 59 First $160,000 at 0% Excess at 15% MTR with 15% pension offset Aged 60 and above Tax free Tax free Superannuation member benefits untaxed element in the fund Age Superannuation lump sum 1 Superannuation income stream 1 Below preservation age First $1.155 million at 30% Excess at 45% MTR no pension offset Preservation age to age 59 First $160,000 at 15% $160,001 $1.155 million at 30% MTR no pension offset Excess at 45% Aged 60 and above First $1.155 million at 15% Excess at 45% MTR with 10% pension offset 1_ Describes taxable component only; tax free component is always tax free. Rates do not include Medicare levy. 2_ A disability superannuation income stream also receives a 15% tax offset. 16

17 Superannuation death benefits paid to dependant 1 taxed element in the fund Age of deceased Type of benefit Age of recipient Taxation 2 Below age 60 Income stream 3 Below age 60 MTR with 15% pension offset Above age 60 Tax free Age 60 and over Income stream 3 Any age Tax free Any age Lump sum Any age Tax free Superannuation death benefits paid to dependant 1 untaxed element in the fund Age of deceased Type of benefit Age of recipient Taxation 2 Below age 60 Income stream 3 Below age 60 MTR Above age 60 no pension offset MTR with 10% offset Age 60 and over Income stream 3 Any age MTR with 10% offset Any age Lump sum Any age Tax free Superannuation death benefits paid to non-dependant 1 taxed and untaxed elements in the fund Age of deceased Any age Any age Type of benefit Lump sum Income stream Age of Taxation 2 recipient Any age Taxable component (taxed element) at 15% Taxable component (untaxed element 4 ) at 30% Any age n/a 3 Income streams commenced prior to 1 July 2007 will be taxed as if received by a dependant 1_ Dependant for tax purposes. 2_ Describes taxable component only; tax free component is always tax free. Rates do not include Medicare levy. 3_ SIS Regs only allow a death benefi t income stream to be paid to dependent child; less than 18, or if over 18, either fi nancially dependent and less than 25 or have a specifi ed disability. 4_ An untaxed element will only arise in a taxed fund where the lump sum death benefi t contains an insurance payout, where the benefi t is paid to a non-dependant. The amount of the untaxed element is calculated by using a statutory formula. 17

18 Superannuation (continued) Dependants (Super vs Tax) summary Dependant for Super Taxation Anti-detriment 1 Child 2 under 18 years of age Yes Yes Yes Child 2 18 years old or over and a financial dependant or in an interdependency Yes Yes Yes relationship Child 2 18 and over and not in above categories Yes No Yes Spouse 3 Yes Yes Yes Former spouse 4 (who is not a financial dependant) No Yes Yes Former spouse (who is a financial dependant) Yes Yes Yes Financial dependant (who is not a spouse, former spouse Yes Yes No or child) Interdependent (who is not a spouse, former spouse or Yes Yes No child) The estate Super death benefi t payments may be paid to a deceased estate. The tax treatment of benefi ts depends on who receives the payment from the estate. An anti-detriment payment may be payable to an estate to the extent that an eligible benefi ciary (see table above) will benefi t from the death benefi t payment. 1_ It is not compulsory for a fund to offer an anti-detriment payment. 2_ A child includes: an adopted child, a stepchild, ex-nuptial child of the person, a child of the person s spouse and someone who is a child of the person within the meaning of the Family Law Act 1975 (for example, a child who is considered to be a child of a person under a state or territory court order giving effect to a surrogacy agreement). 3_ Spouse is further defi ned to include another person (whether of the same or a different sex) in a registered relationship and a de-facto spouse. 4_ A former spouse who does not meet another SIS Act defi nition of dependant generally cannot receive the payment. If they can be regarded as a dependant under the SIS Act they would be entitled under the Tax Act to receive the benefi t tax free and may receive an anti-detriment payment if the Trustee chooses to claim the relevant tax deduction. 18

19 Termination payments Genuine redundancy and approved early retirement scheme payments The fi rst $8,126 plus $4,064 for each full year of service is tax free. The remainder is taxed as an employment termination payment. Employment termination payments ETPs Transitional rules 2 ETP cashed prior to 1 July 2012 Transitional rules 2 ETP contributed to super prior to 1 July 2012 Tax payer Below preservation age Preservation age and over Below preservation age Preservation age and over Subject to individual meeting contribution rules Taxable Maximum component rate 1 First $160,000 30% Excess 45% First $160,000 15% Excess 45% First $1 million 30% Excess 45% First $160,000 15% Between $160,000 30% $1 million Excess 45% Taxable amount 15% taxed within fund Death benefit employment termination payments Recipient Taxable component Maximum rate 1 Paid to dependant 3 Any age First $160,000 0% Excess 45% Paid to non-dependant 3 Any age First $160,000 30% Excess 45% 1_ This rate does not include Medicare levy. 2_ Otherwise known as a directed termination payment, this applies if (as at 9 May 2006) a termination payment was specifi ed under a written contract, Australian or foreign law or workplace agreement under Workplace Relations Act _ Dependant for tax purposes. 19

20 Termination payments (continued) Unused long service leave Amount assessed Maximum rate 1 Standard payment Before 16 August % MTR 16 August % 30% 17 August 1993 After 17 August % MTR Genuine redundancy and approved early retirement scheme payments Before 16 August % MTR After 15 August % 30% Unused annual leave 2 Amount assessed Maximum rate 1 Standard payment Before 18 August % 30% After 17 August % MTR Genuine redundancy and approved early retirement scheme payments Whole period 100% 30% 1_ This rate does not include Medicare levy. 2_ Including annual leave loading. 20

21 Retirement income streams Pension payments A pension commenced on or after 1 July 2007 will have a tax free and taxable amount based on the fi xed percentage of the tax free and taxable components at commencement. See tables: Superannuation member benefi ts taxed element in the fund (page 16). Superannuation member benefi ts untaxed element in the fund (page 16). A pension commenced before 1 July 2007 will still have a deductible amount (see below) based on the existing formula until a trigger event occurs. Trigger events are those aged 60 and over at 1 July 2007, turning 60, commutation (either partial or full) and death. Pension/Annuity deductible amounts (Pre 1 July 2007) For most pensions and annuities, the deductible amounts are calculated differently for tax and for FaCHSIA (Centrelink)/DVA purposes as follows: Deductible amount for tax = (Undeducted purchase price Residual capital value) Relevant number Income stream started Undeducted purchase price includes Before 1 July 1994 Undeducted, concessional, pre 83 1 July June 1997 Undeducted 1 July June 1998 Undeducted, CGT exempt After 3 June 1998 Undeducted, post June 1994 invalidity, CGT exempt Deduction amount FaCHSIA (Centrelink)/DVA = On commutation: FaCHSIA (Centrelink)/DVA = (Purchase price Residual capital value) Relevant number (Original purchase price Residual capital value) - Commutation(s) Original relevant number 21

22 Retirement income streams (continued) Life Expectancies Age Male Female Male Female

23 Minimum annual pension percentage The minimum 1 payment for an account based income stream is determined by multiplying the account balance by the age based percentage. Age (at commencement or each 1 July) Percentage of account balance Under 65 4% 2% 65 to 74 5% 2.5% 75 to 79 6% 3% 80 to 84 7% 3.5% 85 to 89 9% 4.5% 90 to 94 11% 5.5% 95 and over 14% 7% Percentage of account balance for 2010/ No maximum annual payment unless pension is a Transition to Retirement (TTR) pension. For TTR pensions, the maximum annual payment is 10% of the account balance at commencement or each 1 July. 1_ The minimum payment rule is not required to be met until the following fi nancial year for account based income streams that commence on or after 1 June in a fi nancial year. 2_ The relief from the standard minimum payment requirements for 2010/2011 applies to account based annuities and pensions, allocated annuities and pensions and market linked annuities and pensions. 23

24 Retirement (continued) income streams (continued) Income payment Market Linked Income Streams (MLIS)/ Term Allocated Pensions (TAPs) Payment factors (PF) for MLIS/TAPs Term remaining PF Note: MLIS/TAP are generally closed for new investors from 20 September The relief from the standard minimum payment requirements for 2010/2011 also applies for MLIS/TAPs. Further information as to how (and if) this is applied should be sought from your income stream provider. 24

25 Social security Age qualification Pension age for woman born on or before 30 June 1952 Date of birth Eligible at age 1 Born on or before 31 December 1945 Eligible now 1 January 1946 to 30 June July 1947 to 31 December January 1949 to 30 June Age qualification Pension age for women and men 1 born on or after 1 July 1952 Date of birth Eligible at age 2 1 July 1952 to 31 December January 1954 to 30 June July 1955 to 31 December On or after 1 January Current vs transitional rules The following table depicts the changes that apply under the current and transitional rules. If the transitional rules apply, a transitional rate will be paid to the pensioner. Item Current rules 3 Transitional rules Maximum payment as at 1 July 2010 $ per f/n (singles) $ per f/n (each couple) $ per f/n (singles) $ per f/n (each couple) Work bonus Yes No Income test taper rate 50c (singles), 25c (each couple) 40c (singles), 20c (each couple) Additional income test free area for dependent children No Yes, $24.60 per f/n per child 1_ Men born before 1 July 1952 are eligible at age 65. 2_ DVA Service pension age for veterans with qualifying service is generally 5 years younger than the ages specifi ed above. 3_ Applying from 20 September _ These amounts include the maximum fortnightly Pension Supplement available for singles and couples respectively. 5_ Residing in Australia or temporarily absent from Australia for a continuous period not exceeding 13 weeks. 25

26 Social security (continued) Age and DVA Service Pension assets test 1 July 2010 Homeowners For full pension / allowance (up to) For part pension Current rules 1 (less than) Transitional rules (less than) Single $181,750 $649,250 $604,750 Couple (combined) $258,000 $963,000 $941,500 Illness separated couple (combined) $258,000 $1,193,000 $1,104,000 Non-homeowner For full pension / allowance (up to) For part pension Current rules 1 (less than) Transitional rules (less than) Single $313,250 $780,750 $736,250 Couple (combined) $389,500 $1,094,500 $1,073,000 Illness separated couple (combined) $389,500 $1,324,500 $1,235,500 Fortnightly pension reduces by $1.50 per $1,000 (single and couple combined) of assets over full pension threshold. Age and DVA Service Pension income test 1 July 2010 Family Situation For full pension (up to) For part pension Current rules 1 (less than) Transitional rules (less than) Single $146 $1, $1, Couple (combined) $256 $2, $2, Illness separated couple (combined) $256 $3, $3, For income test taper rates, refer to Current vs transitional rules table on page 25. 1_ Applying from 20 September

27 Newstart Allowance 1 July 2010 Single, no children Partnered (each) $ per f/n $ per f/n Note: Pharmaceutical Allowance may be payable in addition; at $6 per f/n (eligible single) and $3 per f/n (each eligible member of couple). Allowance assets test No allowance is payable if assessable assets of the person exceed the following thresholds. Homeowner Non-homeowner Single $181,750 $313,250 Couple (combined) $258,000 $389,500 Allowance income test No reduction in the allowance will occur where fortnightly income is less than $62. The allowance reduces by 50c for every dollar of fortnightly income between $62 and $250. Thereafter the allowance reduces at 60c for every dollar above $250. Partner income may reduce allowance paid. Deeming rates 1 July 2010 Financial investments Deemed income Maximum financial investments before pension impact Single Below $43,200 3% n/a Above $43,200 $1, % $98,756 above $43,200 Pensioner Below $72,000 3% n/a couple Above $72,000 $2, % (combined) above $72,000 $171,911 27

28 Social security (continued) Deprivation of income and assets Deprived assets will be assets tested and deemed for 5 years from the date of gifting where: > the gift exceeds $10,000 in a single fi nancial year or > total gifting exceeds $30,000 over the current and previous 4 fi nancial years if not assessed under the fi rst test. The disposal limits apply to both singles and couples. Commonwealth Seniors Health Card (CSHC) Maximum Adjusted Taxable Income (ATI) 1 Single $50,000 Couple $80,000 (combined) Couple (separated by illness) $100,000 (combined) The limit is increased by $ for each dependent child. 1_ ATI for the tax year is the sum of taxable income, employer provided fringe benefi ts for the applicable tax year, target foreign income, reportable superannuation contributions and total net investment losses. 28

29 Contact list ATO Superannuation info line Personal tax info line Website Centrelink Disability, Sickness & Carers help line Retirement help line Website FaHCSIA Website DVA Info line Website APRA Phone Website ASIC Phone Website Investor website 29

30 For general information only This information has been prepared by BT Funds Management Ltd ABN It is provided solely for the general information of external fi nancial advisers and must not be relied on as a substitute for legal, tax or other professional advice. Further, it must not be copied, used, reproduced or otherwise distributed or circulated to any retail client or other party. The information is given in good faith and has been derived from sources believed to be accurate at its issue date. However, it should not be considered a comprehensive statement on any matter nor relied upon as such. BT Funds management Ltd (including its related entities, employees and directors) does not give any warranty of reliability or accuracy or accept any responsibility arising in any way including by reason of negligence for errors or omissions in the information. BT rr