See our article: 2016 Budget superannuation changes largest since 2006/07.
The 2016/17 Federal Budget is likely to make changes to superannuation – but what changes?
Reduction in contribution caps
It was reported that the Government was considering reducing the general concessional contributions cap from $30,000 to $20,000. Though reports now have it that this has been dropped.
However ‘industry sources’, according to the Australian Financial Review, believe the Government may reduce the non-concessional contributions cap.
Lowering Division 293 threshold
The Government is apparently still planning to reduce the Division 293 threshold. The Div 293 threshold sets an additional 15% contributions tax for high income earners.
Initially this was going to decrease from $300,000 to $180,000 – aligning with the threshold for the top marginal tax rate. However the AFR now reports that the Div 293 threshold will likely be decreased to $250,000 – the same as the ALP policy.
Changes to Transition to Retirement pensions
There are suggestions that changes could be made to Transition to Retirement pensions – even reports that they could be abolished.
Reporting also has it that anti-detriment payments will be abolished.
Marginal tax for super contributions
The Government was apparently considering taxing superannuation contributions based on the marginal tax rate of the member, with a rebate – replacing the current flat tax.
This has reportedly been dropped, as it was deemed to be too complicated and risky.
CGT Discount for superannuation funds
There were reports that the Government was planning to reduce the CGT discount from one-third to 15%.
However this appears to now be off the table. In a press conference last week the Treasurer was asked:
You’ve ruled out changes to capital gains tax, does that include in the superannuation arena?
Yes. The Prime Minister made that clear some time ago.
Catch-up contributions for people with broken work patterns
The Treasurer has previously said an issue being looked at was making it easier for people with broken work patterns to contribute to superannuation.
The Treasurer has previously said that changes to superannuation would focus on ‘integrity measures’ and ‘loopholes’.
In a more recent video he said “next week we’ll be making broader announcements on superannuation, ensuring that we crack down on those loopholes that we all know are there…”
— Scott Morrison (@ScottMorrisonMP) April 27, 2016
An interesting area to keep an eye on would be a change of mind on the part of the Government in regards to ending the Low Income Superannuation Contribution from 30 June 2017. Especially with an election around the corner.
Update: The AFR is reporting the Budget is likely to contain a “LISC-style top-up scheme”.
But given the likelihood of an election being called by the 11th of May, there will be uncertainty that the announced changes will be legislated.
Though we can expect, if reports are to be believed, Government advertising to sell whatever changes the Budget does contain.
The Budget speech starts at 7:30 pm on Tuesday the 3rd of May, and will be covered live by SolePurposeTest.