The composition of the Senate could potentially mean other proposed super measures will be back on the table and altered in order to offset the revenue loss due to any non-concessional contribution (NCC) cap exemptions, a technical expert has said.
“It’s good news that the government is going to be able to proceed with introducing legislation to implement those changes in the lower house, however, from what we hear, they won’t have control in the Senate and so they’re looking to deal with 18 cross-benchers or deal with the Labor Party,” Colonial First State FirstTech executive manager Craig Day told selfmanagedsuper.
“The Labor Party seems to have said they’re happy to agree to all the budget proposals other than the $500,000 lifetime non-concessional contributions (NCC) cap, which is backdated to 1 July 2007, so they have concerns about the backdating issue because in their view that’s retrospective.
“What we may have then is that rather than the government seeking to deal with 18 potentially different views, we may have them looking to negotiate with the Labor Party to get their proposals through.
“However, if there is a change to the NCC cap, for example, it would only take into account NCCs made from budget night rather than 2007, that would have some sort of impact on the projected revenue over the four-year estimate periods.”
Therefore, the government could likely look for savings within the superannuation area to offset any additional lost revenue, Day noted.
“It may well be that we see other amendments to some of the other proposals as a result of agreeing to change something to do with the NCC caps,” he said.
“So while we have certainty that the government has control in the House of Representatives, what we don’t have is absolute certainty about what all of this will look like by 1 July 2017.”
Commenting on whether it was alarming that the other super policies might now be potentially changed due to the NCC compromise, he said it was an area to keep an eye on.
“If there were to be changes which have a revenue impact, then there are a number of things the government could do,” he noted.
“They could seek to modify some of the proposals to increase the revenue they would get from the other proposals, such as the Division 293 tax threshold from $250,000.
“Or they could scale back their spending initiatives in relation to superannuation announced in the budget.
“If they look to offset any potential changes to revenue on the NCC, I think they will recoup any of those costs in the superannuation bucket.”
