Post 2016 Federal Election Superannuation Update

By Cathi Norman - July 29, 2016

With the results of the 2016 Federal Election having now been called, there continues to be much debate in the media around the Coalition Government’s proposed superannuation reforms.

Parliament is due to return on 30 August and the Treasurer, Scott Morrison, stated in an interview on ABC 7:30 on Monday 25 July that the Government is in the process of talking to crossbenchers about the proposed superannuation reforms.  Mr Morrison indicated that the reform package was taken to the election “and we won that election and we’ll be presenting our budget to the Parliament in the normal way”.  However, Mr Morrison has also indicated that there are “some minor technical issues” with its superannuation reforms that the Government is still working through.

The Prime Minister, Malcolm Turnbull, stated on ABC 7:30 on Tuesday 19 July that “all of the Budget Bills will go through the Cabinet process, they'll go through the Backbench Committee and the Joint Party Room. There is always consultation and work on transitional and implementation issues. But overall that package of superannuation reforms not only creates substantial savings for the Budget and for other purposes, but it makes superannuation fairer and more flexible.”

Shadow Treasurer, Chris Bowen, has stated that Labor would take a bipartisan approach to have a legislated objective for superannuation this calendar year. He said "Labor will work constructively with the Prime Minister and the Treasurer to ensure that changes to superannuation are not retrospective". 

So what can we conclude from the above comments?  The proposed superannuation reforms are still currently a work in progress.  With superannuation legislation the devil is always in the detail and there are likely to be changes in the detail of these superannuation reforms.  Malcolm Turnbull has indicated that the Government is aiming to present its legislation before the end of the year.

It will be interesting to see what the legislation actually looks like once it is presented.   It will also be interesting to see how many further changes are made following negotiations between the different Parties and Independents. At the moment it seems it is a case of `watch this space’ to see what we finally end up with.

As a reminder, here are the main proposals announced by the Government in the 2016 Federal Budget:

Superannuation Policies

Superannuation Contributions Tax

Division 293 income threshold to reduce from $300,000 per year to $250,000 per year.

Pension Accounts

Pension balances to be capped at $1.6 million per individual from 1/7/2017. 

Transition To Retirement Pensions

Removal of tax exemption on earnings for pension assets supporting transition to retirement pensions from 1/7/2017.

Concessional Contributions

Annual cap reduced to $25,000 per year for all age groups from 1/7/2017.

Individuals with a superannuation balance less than $500,000 allowed to make additional catch-up contributions.

Non-Concessional Contributions

A lifetime non-concessional contribution cap of $500,000 to be introduced from 3/5/2016. This cap to include contributions from 1/7/2007 onwards.

Tax Deductions For Personal Contributions

All individuals up to age 75 allowed a tax deduction for personal superannuation contributions from 1/7/2017 regardless of employment circumstances.

Contributions Work Test

Work test to be removed from 1/7/2017

 

 

Any information contained in the above bulletin is purely factual in nature and does not take into account any individual’s personal objectives, situation or needs. The information is objectively ascertainable and was not intended to imply any recommendation or opinion about a financial product. This does not constitute financial product advice under the Corporations Act 2001.

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