Budget changes will help boomers boost retirement funds
The budget has provided tax breaks to improve the incomes of baby boomers now surging into retirement, reports The Australian.
Pre-retirees will be able to put up to $50,000 a year into superannuation at concessional tax rates – until the balance hits $500,000.
The Government has also provided a $1,000 taxation rebate for low-income earners which will also help boost retirement incomes.
However these positive moves are balanced against the freeze on indexation of the threshold on which another tax break begins to fade out.
Other new benefits will encourage Australians to save more and enjoy a more comfortable retirement. From 1 July 2011, Australians will receive a 50% discount on up to $1,000 of interest including interest earned on deposits, bonds, debentures and annuity products.
This discount means that interest income will receive a similar tax treatment to capital gains on assets held longer than a year. Capital gains on assets sold within a year of purchase are treated like income tax and incur a taxpayer’s marginal tax rate.
It is estimated that this will help 5.7 million Australians in 2011-12.
The Treasurer said that the move would be of particular benefit to small savers, especially older Australians who are more likely to put extra non-superannuation savings into interest earning deposits.
“It will allow their savings to grow faster,” Mr Swan said.
It also means that funds can be easily withdrawn whenever needed, compared to superannuation savings.
