Proposed changes to tax treatement of earnings for super income streams 2014

Government announcements during the budget suggested a significant change to the superannuation tax system. The tax treatment of earnings on allocated pensions (super income streams) will increase from 1 July 2014. Currently the tax rate on asset earnings within a allocated or account based pension is NIL.

As of the 1 July 2020 it has been proposed by the government that future earnings such as rental income, bank interest and share dividends, held under a superannuation pension will enjoy a free limit of up to $100,000 a year per member account. However any earnings above $100,000 will attract a 15% earnings tax, the same rate that applies to superannuation durin the accumulation phase (before retirement age 55 or more depending in your date of birth.

It has also been announced that the $100,000 threshold will increase each year in line with the Consumer Price Index (CPI) which will impact the tax payable of the underlying earnings should they continue to grow. Those with a self managed super fund or a large balance super fund should speak to their accountant or adviser to see how this may impact them in future.