The Government has left the superannuation system broadly unchanged with no new announcements made.
Eligibility for downsizer superannuation contributions
The Government confirmed its intention to reduce the eligibility age for downsizer superannuation contributions from 60 to 55 years of age. Legislation for the measure has been introduced into Parliament which will allow the change to commence from the start of the first quarter after the amending legislation receives Royal Assent, which will occur 1 January 2023 at the earliest.
Unlegislated superannuation measures announced by the previous government
The Government confirmed it will not proceed with the proposal to permit some self-managed superannuation funds to have audits completed every three years as announced in the 2018-19 Budget. This is unfortunate as the measure would have reduced compliance costs for self-managed funds.
The Government has disappointingly not commented on previously announced reforms to the Non-Arm’s Length Expense (NALE) rules which would have ensured that they operate as envisaged following changes from 1 July 2018. The rules are designed to prevent superannuation funds from circumventing contributions caps and increasing earnings through non-arm’s length dealings. However, significant concerns were raised following the ATO’s broad interpretation of the rules in LCR 2021/2 which could see all the income of a superannuation fund taxed at 45% (including large retail and industrial funds) as a result of immaterial discounts on services provided to the fund. Pitcher Partners will continue to advocate for sensible reforms to ensure NALE rules do not result in significantly disproportionate adverse outcomes for super funds.