The first tranche of super reforms has been published as a draft and is open to comments until Sept. 16th. The legislation, if passed, will address four main issues.
1. It will enshrine super’s objective as being to provide an income in retirement that substitutes or supplements the age pension.
2. It will introduce a Low Income Superannuation Tax Offset. This will make sure individuals do not pay more tax on their super contributions than they do on their take home pay.
3. The restrictions that currently prevent people aged between 65 and 74 from making voluntary contributions to their super will be removed.
4. For those under the age of 75, personal super contributions will be eligible for a tax deduction no matter what their employment arrangements.
The lifetime cap of $500,000 is not included in this first part of the changes, which are designed to make super “fairer, more flexible and more sustainable” according to Scott Morrison. “The majority of Australians – 96 percent of individuals with superannuation – will either be better off or unaffected as a result of these changes. Around a quarter of fund members (including many low income earners) will benefit from the Government’s superannuation package.”
The rest of the reform package, including the lifetime contribution cap, are still being considered by Treasury to get the changes absolutely right.
There’s hope that these legislative reforms will be the end of the tinkering with Superannuation for a few years, so the public can begin to regain confidence in the system.
For enquiries please call Michelle Dowdell +61 2 6263 3071 (enshrining the objective of superannuation in legislation); Jessica Carew +61 2 6263 2548 (other policy queries); or Phil Bignell +61 2 6263 4372 (law design).