It is unclear whether peripheral changes to the superannuation system, such as taxation reforms, would need to align with the proposed objective of super currently undergoing consultation, according to a senior technical executive.
BT Financial Group head of financial advocacy and literacy Bryan Ashenden said draft legislation on the objective of superannuation does not define if minor regulations, which may not fundamentally change the super system but can still have significant impacts, would be bound by its enshrinement into law.
“The intent [with the draft legislation] is that any future piece of legislation or any future regulations that [are] implemented relating to superannuation must have a statement of compatibility to show how that proposed change meets the objective of superannuation,” Ashenden said.
“It’s whether the legislation or regulations ‘relate’ to superannuation. That’s not a defined term under the proposed legislation and in a sense it takes its ordinary meaning.
“So what does ‘relate to superannuation’ mean? The question is would a change in the taxation of superannuation, which means it’s a change to tax legislation and not a change to how the superannuation system operates, would that need to be measured against the proposed objective of superannuation?”
He stressed the need for more clarity on the matter, especially in light of the government’s recent announcement of an additional earnings tax on superannuation balances of more than $3 million.
“I don’t know if there’s a clear yes or no [answer], but it’s one of those things where people might ask: ‘Will the [objective of superannuation] stop legislative tinkering?’” he said.
“Yes, it’s designed to stop tinkering with the policy side of things, but it doesn’t mean that we won’t see other changes from a taxation perspective.
“Think about the proposed tax on superannuation accounts greater than $3 million. Is that a taxation change or a superannuation policy change and would it need or not need to be measured against the objective of super if it’s in place at a future point in time?
“We are yet to see legislation introduced or a true consultation happen on how the [$3 million super tax] measure will actually operate, so again we need to keep our eyes on this space to see where things will come through in the future.”
The government released draft legislation to enshrine the objective of the Australian superannuation system into law earlier this month, with the consultation period closing on 29 September.