The ATO has released key superannuation rates and thresholds for the 2015/16 year. These rates and thresholds have been indexed in accordance with the average weekly ordinary time earnings figures released by the Australian Bureau of Statistics. From 1 July 2015:
- For employees aged 18 to 49 years: The concessional contributions cap is $30,000 for the 2015/16 year. A higher cap of $35,000 applies to those aged 49 years or over on 30 June 2014;
- The non-concessional contributions cap is $180,000 for the 2015/16 year. For some under the “bring forward” rules, the cap is $540,000 over a three year period;
- The CGT cap amount for non-concessional contributions is $1,395,000;
- Superannuation guarantee – the maximum super contribution base for 2015/16 is $50,810 per quarter;
- Superannuation co-contribution – the maximum superannuation co-contribution entitlement for the 2015/16 year remains at $500. However, the lower income threshold increases to $35,454 and the higher income threshold increases to $50,454 for the 2015/16 year;
- Superannuation benefit caps – the low rate cap amount for 2015/16 is $195,000. The untaxed plan cap amount for 2015/16 is $1,395,000;
Employment termination payments (“ETPs)” will also change:
- The ETP cap amount for life benefit termination payments and death benefit termination payments for 2015/16 is $195,000;
- The tax-free part of genuine redundancy payments and early retirement scheme payments – for genuine redundancy and early retirement scheme payments for 2015/16, the base limit is $9,780 and, for each complete year of service, $4,891;
Our partners at the Association for Payroll Specialists also advise that the tax calculations on other ETPs will now be dependent on employee’s dates of birth, as this determines a preservation age. They report:
From 1 July 2015 onwards it is important to know the employee’s date of birth as this will impact on whether any ETP payment they receive that can be taxed at the low rate should be taxed at 17% or 32%
Here is an example of what to look for:
- An employee born on 30 November 1960 who is receiving an Excluded ETP Life Benefit of $70,000 on 15/12/2015;
- They will turn 55 in the 2015/16 financial year but won’t turn 56 until the 2016/17 financial year
Will this ETP have a withholding rate of 17% or 32%?
|Date of birth||Preservation age|
|Before 1 July 1960||55|
|1 July 1960 – 30 June 1961||56|
|1 July 1961 – 30 June 1962||57|
|1 July 1962 – 30 June 1963||58|
|1 July 1963 – 30 June 1964||59|
|From 1 July 1964||60|
Where a person is turning 55 between 1 July 2015 and 30 June 2016 it means that they would have been born between 1 July 1960 and 30 June 1961. As per the table above this means they would have a preservation age of 56.
When the employee receives their ETP on 15 December 2015, they will not have reached their preservation age (56) and so the ETP component eligible for the low rate tax will be taxed at 32%.
If the employee had already reached 55 on or before 30 June 2015, then they have already reached their preservation age.