The federal government has made a commitment to reassess the superannuation contribution cap limits in order to lessen the instances of accidental breaches that lead to severe penalties for individuals.
“We’re working with superannuation stakeholders to prevent inadvertent breaches of the contribution caps resulting in a disproportionate penalty,” Assistant Treasurer Arthur Sinodinos said at a Liberal Party fundraising event held in Sydney last Friday.
“I’ve had a number of my constituents and colleagues complaining about, through no fault of their own, how they’ve breached those contributions caps, for a variety of reasons, and they find themselves stuck with disproportionate, heavy penalties.
“Some of the stories are indeed quite heart-rending when people tell you about the impact it’s had on them when they suddenly get a very large bill.”
Sinodinos said the government would also focus on other areas of superannuation regulation and compliance, particularly those affecting the SMSF sector.
“The measures we are proceeding with include penalties for the promoters of illegal early-release schemes and more flexible administrative penalties for self-managed super funds that break the rules rather than the all-or-nothing penalties available at the moment,’ he said.
The Assistant Treasurer pointed out the decision last year to scrap the tax imposed on superannuation earnings over $100,000 used to support a retirement income stream was an example of the type of changes the government was looking to make to the super system.
“The feedback from industry [and] the advice from Treasury was that this tax would involve significant changes to the way super funds are currently taxed, and would require substantial changes to their reporting systems, and was effectively non-implementable,” he said.
“Or certainly if it was implementable, the costs of doing so were very, very high.
“We took the view there is no point proceeding with a measure which is unlikely to raise the revenue people were talking about and is going to have such excessive compliance costs on the people who have to implement the measures.”
