Welcome to the May 2007 edition of Cbus News, a monthly newsletter designed to update employers on a range of superannuation issues.

Employers can register to receive Cbus News by subscribing directly through the Cbus website. If you would like a colleague to receive this newsletter please forward it to them and they can subscribe by clicking here.

If you have any feedback about the content of the newsletter please email Gordon Noble at gnoble@cbusmail.com.au.

The Federal Budget included a number of changes that will impact on superannuation members.

Increased co-contribution payment for 2005-06

The Government will pay a one-off additional superannuation co-contribution for those persons who made eligible co-contributions contributions in the 2005-06 income year. The effect of the decision will be to double the amount of the co-contribution that the Government paid in respect of 2005-06.

As an example a superannuation member who received a co-contribution of $1,500 that related to personal superannuation contributions made in the 2005-06 income year will receive an extra co-contribution of $1,500, making a total co-contribution of $3,000. If they were eligible for a $500 co-contribution they will receive a total co-contribution of $1,000 for the year. The Government intends to make the contribution into member super accounts before 30 June 2007.

Increased resources for ATO to collect super debts

The Government will increase the funding to the Australian Taxation Office to enable them to enhance their ability to collect superannuation guarantee charge payments.

The ATO expects to be able to transfer an additional $60.0 million of superannuation guarantee charge payments to employees’ superannuation accounts as a result of the increased compliance activity.

Financial Literacy

The Government will increase the funding for the Financial Literacy Foundation, anabling it to extend the Understanding Money media campaign, and increase professional development opportunities for teachers to support implementation of the National Consumer and Financial Literacy Framework.

Opposition Response

The Federal Opposition Leader Kevin Rudd has promised that he will not change the government’s new superannuation laws if elected. He has said that he believes that it is important that Australians have certainty when they retire. Labor has promised that it will create a Superannuation Clearing House which small businesses with less than 20 employees would be able to use free of charge in order to pay their superannuation contributions.

With the Federal Government’s Simpler Super changes taking effect from the 1 July 2007 we continue our focus on how the changes will impact on super members. This month we look at the impact on self-employed workers.

From 1 July 2007 a self-employed person will be able to claim a full tax deduction for all contributions made to a super fund until the age of 75. This replaces the existing regime, which allows a tax deduction of 100% on contributions up to $5,000 with a tax deduction of 75% for contributions in excess of that amount.

Under the new rules contributions to superannuation made by the self employed will be treated in the same way as contributions made by employers for the benefit of employees. From 1 July 2007 the maximum contribution that can be made that is tax deductible for self-employed people will be $50,000. However, transitional arrangements apply . During the transitional period (financial years of 2007-08 to 2011-12), the maximum contribution will be $100,000 for those 50 years of age and over.  

Extension of co-contribution scheme to self-employed

From 1 July 2007 the Federal Government’s co-contribution scheme will be extended to self-employed people.

The eligibility criteria for self-employed people will be based on the assessable income, which includes reportable fringe benefits, less deductions that result from carrying on a business.

For more information on the super co-contribution go to: http://www.cbussuper.com.au/smarts/co-contributions

To download a fact sheet from the Federal Government’s Simpler Super website click here.

To download a product disclosure statement for Cbus' Self Employed product go to http://www.cbussuper.com.au/personal-super.

For further information on transitional arrangements that apply to self employed business owners please ask to be referred to a Cbus financial planner at IFS Financial Planning on 1300 138 848.

From 1 July 2007, where an existing member has not given their TFN to a fund, tax will be withheld at the top marginal rate plus Medicare levy if the member’s concessional contributions exceed $1,000. For accounts that begin after 1 July 2007, the $1000 threshold does not apply. Tax will be withheld on all contributions at the top marginal rate plus Medicare levy if the account holder has not quoted their TFN.

To help our members check to see whether the fund has their tax file number Cbus has set up a link on our website to allow members and employers to conduct a real-time check.

To check whether we have a tax file number the member’s account number, date of birth and postcode is required. Upon submitting this information the website will indicate whether we have a tax file number or not. No further information is provided.

The website link can be found at: http://cbussuper.com.au/tfn 

Cbus wrote to members confirming we have their TFNs in April this year and will write to members who have not supplied their TFNs in May / June this year to alert them. To find out whether Cbus has a member’s tax file number the member can check their latest Record of Contributions, which was mailed in February this year with the Cbus News magazine.

You can also call Cbus on 1300 361 784.