Dynamic Business Logo
Home Button
Bookmark Button

Small business hit as superannuation co-contribution dropped in Federal Budget

In a blow to small business, the Government have delivered cuts to superannuation tax concessions in the Federal Budget, expecting to save more than $1 billion next year by halving limits on tax-deductible contributions, and reining back on its co-contribution scheme.

The Government will halve the maximum limit on concessional contributions from $100,000 to $50,000 for those aged 50 or more and from $50,000 to $25,000 for younger investors. The new limits will apply from July 1 and it is expected small businesses and low income earners will be most affected.

Small business owners and women are generally among those who maximize super contributions in an effort to build up their super accounts, and with the Government dropping their co-contribution rates, small business will likely suffer.

The Government will reduce its matching of super contributions by workers earning less than $60,342 from $1.50 for every dollar invested to $1 for the next three years. It will pay a $1.25 co-contribution for a further two years before the full co-contribution comes back in 2014.

This means workers earning less than $30,342 who contribute $1000 from their after-tax income will see their co-contribution cut from a maximum $1500 this year to $1000 for the next three years.

Treasurer Wayne Swan said the cuts were part of “major structural savings to support the long term sustainability of our pension system and the budget more broadly.”

People who read this, also liked:
Federal Budget private health rebate pain for wealthy
Federal Budget delivers welcome surprise for first home buyers
Pensioners given boost in Federal Budget

What do you think?

    Be the first to comment

Add a new comment

Jessica Stanic

Jessica Stanic

Jessica has a background in both marketing and journalism and is dedicated to making the website the leading online resource for small to medium businesses with ambitions to grow.

View all posts