Having included a substantial superannuation reform package as part of the 2016-17 Budget, the Commonwealth government is now nearing finalisation of the legislation package that will implement the changes.
On 15 September 2016, the Treasurer and the Minister for Revenue and Financial Services made a joint press release announcing a number of improvements to the proposals included in the 2016-17 Budget, and on 10 October 2016 an exposure draft of the final tranche of legislation implementing the reforms was released for public comment.Susannah Stanford, Maddocks Lawyers
The 2016-17 Federal Budget (Budget) handed down on 3 May 2016 included the comments that:
A prosperous Australia needs a well-targeted superannuation system that supports and encourages all Australians to save and not be dependent on the Age Pension in retirement. We have a world-class superannuation system and we want to keep it that way. Better targeting superannuation tax concessions will improve the sustainability and integrity of the superannuation system.
With these aims in mind, the Budget introduced a suite of reforms to the tax and superannuation laws with the stated objective of ensuring that superannuation is able to provide income in retirement to substitute or supplement the Age Pension. The proposed reforms centre around the key principles of sustainability, flexibility and integrity.
However, since the July federal election, the federal government has refined its budget measures and released three tranches of legislation relating to the proposed superannuation changes.
On 7 September 2016, an exposure draft of the first tranche of the legislation giving effect to some of the Budget measures was released. You can read more about what was included in that exposure draft in an earlier ClearLaw article titled "Budget superannuation measures — first tranche of draft legislation released". As noted in that article, several key measures proposed in the Budget were not included in the first exposure draft.
On 15 September 2016, in response to ongoing consultations, the government announced some changes to the previously made proposals. Those changes are explained further below.
On 27 September 2016, a second tranche of draft legislation was released, implementing some (but not all) of the remaining Budget proposals. You can read more about that draft legislation package on the Treasury Website.
On 10 October 2016, a third tranche of the draft legislation was released for public consultation. This draft legislation included the changes in relation to lowering the annual non-concessional contributions cap to $100,000 and restricting eligibility to make non-concessional contributions to individuals with balances below $1.6 million.
On 15 September 2016, the Treasurer and the Minister for Revenue and Financial Services announced proposed changes to the superannuation-related measures that were announced as part of the Budget. You can read the Government's press release here. The proposed changes announced on 15 September 2016 included:
Treasury summarised those changes indicating that, in effect, Australians will be able to contribute $125,000 each year (that is, concessional contributions of $25,000 and non-concessional contributions of $100,000) and, if taking advantage of the non-concessional 'bring forward', up to $325,000 in any one year until such time as they reach $1.6 million.
Some other changes to the Budget proposals were also announced on 15 September 2016, including abandoning the proposal to remove the work test that currently applies to contributors aged between 65 and 74.
In the September article, it was noted that several of the Budget measures were not covered in the first tranche of draft legislation. Between the second and third tranches of draft legislation, all those measures have now been addressed (taking into account the changes announced on 15 September 2016).
The draft legislation and associated explanatory material can be viewed via the Treasury website. The third tranche of draft legislation was open for public consultation until 23 October 2016.
Most measures included in the reform package are expected to take effect from 1 July 2017.
You can read more detailed information, including factsheets on each of the proposed changes, provided by The Treasury on the Treasury Website.
For more information, contact Maddocks on (03) 9258 3555 and ask to speak to a member of the Commercial team.
You can read earlier ClearLaw articles on a range of topics relating to superannuation, contributions, reserves and SMSFs generally.
Julian Smith is a partner in the Maddocks Commercial team.
Julian advises extensively in the following areas:
Julian advises clients ranging from public companies servicing the wholesale financial services market to high net worth individuals and their advisers.
Julian has been with Maddocks since undertaking articles in 2001.
The legal information and commentary on this site is general only. Documents ordered through Cleardocs affect the user's legal rights and liabilities. To assess their suitability for the user, legal accounting and financial advice must be obtained.
For more information, contact Maddocks on (03) 9258 3555 and ask to speak to a member of their team.