Senior Financial Adviser Frank Oliveri of PFG Financial Services has  welcomed the passing of legislation in the House of Representatives which increases concessional contribution caps for older Australians. These changes are a step in the right direction. Read below to see what this means to you.

New super contribution

Parliament has passed new laws on superannuation contribution caps and an increase in contribution tax for high income earners.

The before tax, or concessional, contributions cap will be temporarily increased to $35,000 for the 2013-14 financial year for all individuals aged 60 years and over.

From the 2014-15 financial year onwards, the $35,000 concessional contributions cap will be extended to all individuals aged 50 years and over.

This means the general $25,000 concessional cap will remain unchanged for people aged under 60 for the 2013-14 financial year.

 “A step in the right direction”

The passing of this legislation to increase the concessional contribution cap to $35,000 has been a great step in the right direction.

“This higher cap will now help Australians nearing retirement to contribute more to the superannuation. This is especially important for women and those who have had broken work patterns.

“It is a step in the right direction, allowing Australians to save for an adequate retirement income to give them security and dignity in retirement and reduce their reliance on the age pension.

 Tax on higher earners

Also people who earn more than $300,000 will be subject to an extra 15% contribution tax on concessional contributions made from 1 July 2012.

This effectively means that people in this income bracket will be paying 30% to the taxman on any pre-tax contributions such as superannuation guarantee and salary sacrifice arrangements.

It is important that older Australians take advantage of these changes. If you have any questions on any of the above please feel free to call our office on (03) 9375 5100 to arrange an appointment.

Frank Oliveri is an Authorised Representative of AMP Financial Planning Pty Limited.