Summary of 2009/2010 Federal Budget

2.      Personal Tax Rates

For the income year commencing 1 July 2009 the Resident Personal Tax Rates (excluding Medicare Levy) will be:

3.      Superannuation Caps

From 1 July 2009, the concessional contributions cap will be halved from the current standard cap of $50,000 to $25,000.

A reduction will also apply to the transitional caps to taxpayers aged 50 and over.  The transitional concessional cap will be reduced from the current annual threshold of $100,000 to $50,000 per year.  The new transitional concessional cap will apply until 30 June 2012.

Non-concessional contribution caps remain at $150,000 (indexed) per year which will be six times the standard concessional contribution cap.

4.      Superannuation Co-Contributions

The superannuation co-contribution scheme will be reduced to 100% of eligible contributions from 1 July 2009 until 30 June 2012.  The rate will increase to 125% of contributions from 1 July 2012 until 30 June 2014 and returned to its former level of 150% from 1 July 2014.

5.      Age Pension

Eligibility for the age pension will gradually increase to 67 years of age. Pension changes will apply to new pension entrants from 1 July 2017, which means that it applies to people who are 57 or younger in July 2009.

6.      Changes To Superannuation Guarantee Ruling

The Australian Taxation Office has released Superannuation Guarantee Ruling SGR 2009/2 which was originally published in draft form as SGR2008/D2.  This ruling will apply from 1 July 2009 and employers will need to be aware of the position in calculating superannuation contributions and consider whether changes to their systems are necessary.

SGR 2009/2 generally recognises that ordinary hours of work, used to determine Ordinary Times Earnings (OTE), will be specified in an industrial award or employment agreement.

This Ruling provides clarification when an industrial award or employment agreement distinguishes between overtime and ordinary hours.  Overtime does not form part of OTE, even if employees work overtime on a regular basis.

The Ruling also adopts a simpler approach to determining what is included in Ordinary Time Earnings and what is excluded. Essentially, under this approach, all earnings are included in OTE, except overtime or payments that relate specifically to overtime or other payments expressly excluded from OTE.  Components of an employee’s Ordinary Time Earnings are shown in the table on the following page.