The opportunity to make large personal contributions (up to $1 million) without incurring additional tax is only available until 30 June 2007.

Between 10 May 2006 and 30 June 2007, a contribution limit of $1 million applies:

• Personal (after-tax) contributions up to $1 million are not taxed
• Personal (after-tax) contribution amounts over $1 million will be taxed at 46.5%

From 1 July 2007, this contribution limit reduces to $150,000 p.a.

From 1 July 2007, superannuation accounts will consist of two components only. The two new components are a tax-free component and a taxable component.

If your super is paid to you as a lump sum and you are:

• 60 years of age and over - you pay no tax if the benefit has already been subject to tax on contributions and investment earnings.
• Aged 55 to 59 - you pay no tax on the first $140,000 (2007/2008) of your total payout less the tax-free component. You pay 15% tax plus Medicare levy on the remaining taxable component over the $140,000.
• Under age 55 - you pay 20% tax plus Medicare levy on your entire payout less the tax-free component.

The RBLs (Reasonable Benefit Limits) will also be removed, which means there will be no upper limits to how much you can save within super.

Contribution caps from 1 July 2007

Personal (after-tax) contributions will have an annual limit of $150,000.

If you are under 65 years of age, you can contribute up to $450,000 in a year ñ but this means the total of your personal contributions during any subsequent 3 year period cannot exceed an average of $150,000 per year.

Contributions over the limit will be taxed 46.5%. Contributions under the limit are not taxed.

Employer contributions (including salary sacrifice) and any other contributions for which you intend to claim a tax deduction (e.g. as a self-employed or unsupported person) will have an annual limit of $50,000.

If you are aged 50 or older, a transitional limit of $100,000 p.a. applies until 30 June 2012.

Contributions under the limit are taxed 15%. Contributions over the limit will be taxed a total of 46.5% (an additional 31.5% tax).

Tax File Number (TFN)

The Federal Government's new rules mean there are greater consequences if your superannuation fund does not have your Tax File Number from 1 July 2007.

If we don't have your TFN, you will be unable to make personal contributions.

In addition, employer contributions will be taxed at 46.5% instead of 15%. You may be able to retrospectively recover your additional tax by completion of the appropriate paperwork.

Please check your most recent member statement or access your account online at www.tasplan.com.au to check that we have your TFN.

Employment Termination Payments (ETPs)

From 1 July 2007, these payments can only be contributed to super if they are made under an employment contract in force on 9 May 2006, and the contract specified a payment to you on termination of employment.

ETPs, if directly rolled over into super, generally do not count toward the contribution caps described above, but are subject to 15% contribution tax.

From 1 July 2012, these ETPs can no longer be rolled over to super.

Keeping your money in super

The Federal Government has removed the requirement that you must cash your super once you are 65 and retired. This means you can leave your money in super for as long as you like, taking advantage of the lower tax rates that apply to super.

This change took effect on 10 May 2007.

Consolidate your pre-July 1983 super

If you have more than one superannuation account and one of them dates back to pre-July 1983, you may want to think about consolidating your super accounts before 1 July 2007.

This could be important because all pre-July 1983 super becomes part of the new tax-free component, and combining accounts may increase the amount of the tax-free component.

Government co-contributions for the self-employed

If you are under 65 years of age, earn less than $58,000 and make a personal contribution, you will be eligible to receive a Government co-contribution. This currently only applies to employees, but will be extended to include self-employed people from 1 July 2007.

Indexation will apply from 1 July 2007 to the $58,000 threshold.

Superannuation pensions are becoming simpler and cheaper

Payments you receive after 1 July from a superannuation pension will be tax-free from age 60.

Centrelink's assets test taper rate will be reduced from 20 September 2007. For people with assets close or over the threshold and who currently don't qualify for the age pension, their eligibility to receive an age pension could change.

Another change is that for some types of superannuation pension, the maximum amount of pension payments you can take in a year will be removed.

Contribution splitting

From 6 April 2007, you can no longer transfer personal after-tax contributions made on or after 6 April 2007 to your spouse's super account. You are still able to transfer personal after-tax contributions made before that date.

There is no change to splitting taxable contributions and, subject to existing rules, you can still transfer these to your spouse.