The federal government today released the first tranche of exposure draft legislation for superannuation reforms that were announced in the 2016 federal budget.
In a joint statement, Treasurer Scott Morrison and Revenue and Financial Services Minister Kelly O’Dwyer said the reforms would make the super system fairer, more flexible and more sustainable, and the majority of Australians – 96 per cent of individuals with super – would either be better off or unaffected as a result of the changes.
The first tranche of draft legislation would enshrine the objective of super in legislation, being to provide income in retirement that substituted or supplemented the age pension, which had guided the development of the government’s reforms, Morrison and O’Dwyer said.
The draft legislation will also improve access to concessional contributions by allowing people under the age of 75 to claim a tax deduction for personal super contributions irrespective of their employment arrangements.
It will provide more flexibility and choice for older Australians by removing the restrictions that currently prevent some people aged between 65 and 74 from making voluntary contributions to their super.
Further, it will encourage more people to make contributions to the super fund of a low-income spouse and introduce the Low Income Superannuation Tax Offset (LISTO).
The release of the exposure draft legislation and explanatory material on the remaining measures will follow in the coming weeks.
Commenting on the controversial $500,000 lifetime cap for non-concessional super contributions, Morrison said it was a complex piece of legislation and superannuation was a very technical area.
“It was never in the first tranche just like the concessional cap bring forwards or the concessional cap reductions – they are complicated legislative measures and so that is something that Treasury continues to work through and consult on to make sure they get it absolutely right,” he revealed during a media conference today.
“My consultation with colleagues has been in very good faith and I really appreciate the very honest and very good faith feedback that I’ve received.
“It’s been a good opportunity to talk about the issues and some of the concerns that have been raised, but one thing they remain very committed to, as do I, is that it must do its job not only to make the superannuation system more flexible [but also] more sustainable.”
The SMSF Association welcomed many elements of the first tranche of draft legislation and said it believed it would give the system a much needed confidence boost, but it wanted adequacy to be addressed in the definition of super.
“We have been firm supporters of LISTO, deductible contributions, removing the work test for over 65s and spouse contribution changes,” SMSF Association chief executive Andrea Slattery said.
“Additionally, implementing the proposed carry-forward of unused concessional contribution caps and providing extra contribution cap space above $25,000 per year for people aged 50 and over would further support these changes.
“It has been our long-held position that in any definition of the objective of superannuation that adequacy must be included.
“Although we were broadly supportive of the thrust of the Financial System Inquiry recommendations, we believed that on this issue it should have included adequacy as an integral part of its definition of the objective of super.”
The association would continue to consult with the government on the issue of including adequacy in the definition and supporting principles, she added.
