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Unit 10 Superannuation - Learning Outcomes Explain the...

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1/17/2012 1 Unit 10 Superannuation Chap 16 Learning Outcomes Explain the structure and recent changes in the Australian superannuation system Explain the operation of the superannuation guarantee charge act. Compare and contrast the regulation and use of SMSF and public superannuation funds Explain the rules and taxation of contribution to and payout from superannuation funds. 2 History of Superannuation in Australia The three-pillar model to retirement funding – Age pension – Occupational based contribution – Personal contribution Changes to contribution – Initially 3% of gross income – Currently at 9% of gross income (increasing to 12%) – Co-contribution for low income earners – Employment requirement lifted for anyone <65 yrs 3 Changes to taxation on payout – Used to be complicated – Currently lump sum payout is tax free for 60+ Other changes – Easier to transfer between funds – Reasonable Benefit Limits abolished – Cooper Review: MySuper and Superstream – Ripoll Inquiry: Ban commission-based fees and charges from 1/7/2012 – Reduction of contribution thresholds The Basic: Superannuation Guarantee Imposed on all employers The charge can only be reduced by an employer contributing a percentage of a person’s ordinary time earnings – Overtime and allowances excluded The contribution which is required to be paid on a person’s earnings in each quarter must be at least equal to 9 per cent of the employee’s ordinary time earnings 5 Three Stages of Superannuation Contributions Usually involves cash being paid into the superannuation fund for its members Contributions may be made: by an employer for employees by employees by people under age 65 by the government as a co-contribution 6
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