The federal government today released the second tranche of exposure draft legislation for superannuation reforms that were included in the 2016 federal budget.
In a joint statement, Treasurer Scott Morrison and Revenue and Financial Services Minister Kelly O’Dwyer said 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 release of the exposure draft legislation and explanatory material on the remaining measures will follow in the coming weeks, and the government remains on track to have the measures introduced into parliament before the end of the year.
The second tranche of exposure drafts includes legislative amendments to implement the government’s $1.6 million transfer balance cap, which places a limit on the amount an individual can hold in the tax-free retirement phase.
The draft legislation will make the taxation of concessional contributions (CC) in super more sustainable by lowering the CC cap to $25,000 a year and reducing the income threshold at which individuals are required to pay an additional 15 per cent contributions tax from $300,000 to $250,000.
It will also allow individuals with balances of less than $500,000 to carry forward unused concessional cap space for up to five years, as well as encourage the development of innovative retirement income products to provide more choice and flexibility for retirees.
Also included in the draft legislation is the abolition of the outdated anti-detriment provision, which effectively results in a refund of a member’s lifetime super contributions tax payments into an estate, and it will also apply commensurate treatment for these measures to defined benefit schemes and constitutionally protected funds.
Finally, it will ensure transition-to-retirement income streams are accessed for the purpose for which they are designed and not for tax minimisation.