News07 October 2020

Federal budget 2020

Candice
Candice
Author

A new super stapling mechanism, a super fund comparison tool and an annual performance test for MySuper products were the headline super measures announced in the 2020 Federal Budget.

The Budget had very little for retirees, other than a one-off additional payment to pensioners and further funding for aged care.

Importantly, the legislated timetable to increase the super guarantee rate to 12% was left untouched and there were no changes to the way super is taxed or any changes to the concessional or non-concessional cap limits on voluntary contributions.


Snapshot of super measures

  • super fund will follow member to new job
  • new online MySuper comparison tool
  • MySuper products will be subject to an annual performance test
  • pensioners and other eligible recipients will receive two additional economic support payments of $250
  • super funds will need to be more accountable and transparent on how they manage the retirement saving of their members.

Super measures

For super members

Super fund will follow member to new job.

By 1 July 2021:

  • If an employee doesn’t nominate an account at the time they start a new job, employers will pay their super contributions to their existing fund.
  • Employers will obtain information about the employee’s existing super fund from the ATO.
  • The employer will do this by logging onto ATO online services and entering the employee’s details. Once an account has been selected, the employer will pay super contributions into the employee’s account.
  • If an employee doesn’t have an existing super account and doesn’t make a decision regarding a fund, the employer will pay the employee’s super into their nominated default super fund.

 More information

New online MySuper comparison tool.

By 1 July 2021, the YourSuper tool will:

  • Provide a table of simple super products (MySuper) ranked by fees and investment returns.
  • Link to super fund websites where a member can choose a MySuper product.
  • Show current super accounts and prompt members to consider consolidating accounts if you have more than one.

More information

MySuper products will be subject to an annual performance test.

  • If a fund is deemed to be underperforming, it will need to inform its members of its underperformance by 1 October 2021 and provide information on the YourSuper comparison tool.
  • Underperforming funds will be listed as underperforming on the YourSuper comparison tool until their performance improves.
  • Funds that fail two consecutive annual underperformance tests won’t be permitted to accept new members. These funds won’t be able to re-open to new members unless their performance improves.

More information


For retirees

Pensioners and other eligible recipients will receive two additional economic support payments of $250.


For super funds

Super funds will need to be more accountable and transparent on how they manage the retirement saving of their members.

By 1 July 2021:

  • Super trustees will be required to comply with a new duty to act in the best financial interests of members.
  • Trustees must demonstrate that there was a reasonable basis to support their actions being consistent with members’ best financial interests.
  • Trustees will provide members with key information regarding how they manage and spend their money in advance of Annual members’ meetings.

More information


Snapshot of other measures

  • no changes to the Medicare levy
  • low- and middle-income tax offset and low-income tax offset additional benefit
  • lowering of personal income tax rates.

Other measures

No changes to the Medicare levy.

The Medicare levy will remain at 2% of your taxable income.

Low- and middle-income tax offset and low-income tax offset additional benefit.

The government will provide a one-off additional benefit from the low- and middle-income tax offset (LMITO). The benefit is worth up to $1,080 for individuals or $2,160 for dual income couples.

The low income tax offset will increase from $445 to $700.

More information

Lowering of personal income tax rates.

The government announced the lowering of personal income taxes consistent with their 2018-19 plan. The table below provides a summary of the income tax rates.

Rate (%)

Current thresholds (from 1 July 2019)

Income range ($)

Thresholds from 1 July 2020 (stage 1)

Income range ($)

Tax free

0-18,200

0-18,200

19

18,201 – 37,000

18,201 – 45,000

32.5

37,001 – 90,000

45,001 – 120,000

37

90,001 – 180,000

120,001 – 180,000

45

> 180,000

> 180,000

The below table provides a summary of the Stage 2 income tax cuts that are expected to come into effect as at 1 July 2024.

Rate (%)

Threshold from 1 July 2020 (Stage 1) ($)

Threshold from 2024 (Stage 2) ($)

0

0 – 18,200

0 – 18,200

19

18,201 – 45,000

18,201 – 45,000

30

 

45,001 – 200,000

32.5

45,001 – 120,000

 

37

120,001 – 180,000

 

45

>180,000

>200,000

More information


Along with the super changes the budget covered three other key areas:

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