Budget 2015 rumours: Superannuation & SMSFs

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Federal Budget 2015/16, superannuation, SMSF

Update: Our 2015 Budget superannuation summary – 2015 Budget leaves superannuation largely alone.

With the 2015 Federal Budget less one week away now is the time when the Government quietly floats ideas to see how people respond, meaning there is lots of speculation and little detail. Here are some of the changes to superannuation which may be included in the 2015 Budget.

 

Prime Minister Tony Abbott said the 2015/16 budget will be “prudent, it’ll be frugal, it’ll be responsible, but I think when it comes to savings, people will find it pretty dull and pretty routine.”

Treasurer Joe Hockey said any changes to the superannuation rules have “got to be on a prospective basis.”

…superannuation is a very good example where governments come along and constantly tinker at the edges and sometimes make substantial changes, when people have spent all of their working life contributing to superannuation and expect that the system will be consistent for their retirement…

Assistant Treasurer Josh Frydenberg said the 2015 budget would not have the same “shock and awe” as 2014.

There also may not be widespread support in the Coalition for changes to superannuation with Parliamentary Secretary Steve Ciobo telling Sky News, “this so-called consensus view that there needs to be a crack-down on superannuation concessions for the wealthy is complete rubbish.”

Also, the Treasurer said in March that there would be no changes to superannuation in the next 6 months.

The 2015/16 Budget will be released on the night of Tuesday the 12th of May 2015.

We will be live blogging the 2015 budget from shortly before 7.30pm on Tuesday the 12th of May here.

No superannuation tax increases in Budget

Treasurer Joe Hockey has told the post RBA interest rate cut press conference that:

I want to emphasise, it’s going to be very hard for people who retire and rely on their savings being in the bank and that’s one of the reasons why the Government has decided that it is unacceptable to have any increases in taxation on superannuation in the upcoming Budget. Because now is not the time to hit superannuants who are facing potentially many years of lower returns on their savings in bank accounts, and that’s weighed heavily on our consideration of a range of different issues. [emphasis added]

High income earners superannuation

Following the release of the Tax Discussion Paper by the Treasurer and the release of research by ASFA there was a great deal of speculation of bipartisan support for changes to the superannuation tax concessions going to people with high superannuation balances. However this bipartisanship did not last long and it is unclear if changes will result.

Assistant Treasurer Frydenberg said “at the same time we need to be very conscious of the fact that we made that commitment at the last election that there’d be no adverse or unexpected changes to super and that we need to look right across the board and not just, as the Labor Party likes to do, at the higher income earners.”

Stopping lump sums

Fairfax media have variously reported that a senior Treasury official, Treasury executive director and chief operating officer John Lonsdale, told the ASIC annual conference in Sydney that new retirees would be restricted from taking lump sums and instead have to take an income product.

Review of retirement income

There is an increasing number of questions from journalists about a review of retirement income, seemingly both the Age Pension and superannuation systems.

Update: Assistant Treasurer Josh Frydenberg has said superannuation was likely to be included in a review of retirement income, to be conducted before the next federal election.

The Finance Minister was asked about this on the 7.30 report:

SABRA LANE: Minister, there are calls for an independent review of retirement income in this country looking at pensions and superannuation. Do you favour a review?

MATHIAS CORMANN: Well we’ve got right now a review of our tax system, which – obviously that’s very significant…

SABRA LANE: So you’re not particularly enamoured to having a separate independent review on this in particular?

MATHIAS CORMANN: Well, we haven’t announced a review. Let’s just see what decisions the Government will announce in the coming months.

Preservation age

At a doorstop interview the Treasurer was asked, “are you looking at the age you can access superannuation? Is that something you are looking at to make it more affordable for the Government?” Mr Hockey responded:

Look, when superannuation was introduced in 1992, life expectancy was 72. Life expectancy today is 82. It’s certainly going to 100. So, we’re very mindful of the changing demographics in Australia. We will have more to say about retirement income and the planning for retirement income in the not too distant future.

First home buyers accessing superannuation

It is has not only been the Treasurer raising this option, with Liberal Party members of the House of Reps Economics committee asking APRA representatives about options, and a Nationals backbench Senator supporting it in a speech.

Age Pension

The Government may alter its position on changes to the indexation of the Age Pension, and instead tighten the assets test.

The Government is also considering splitting the Seniors Health Card from access to Age Pension, and further limiting access to the card for high income earners.

Update: The Daily Telegraph is reporting the Government will include in the Budget a lowering of the age pension asset test threshold from $1.15 million to $820,000 for couples, “around $550,000” for singles.

Update 2: Assistant Treasurer Josh Frydenberg has confirmed the Government will drop changes to pension indexation in the Budget and will change  the pension taper rate.

No adverse changes to super

Prime Minister Tony Abbott has again promised there will be no “adverse or unexpected changes to superannuation during this term.”

SMSF Borrowing

Though not directly budget-related, Assistant Treasurer Josh Frydenberg has indicated the Government will place restrictions on SMSF borrowing, rather than banning it as recommended by the Financial System Inquiry.

Other potential Budget changes:

  • Tony Abbott has ruled out changes to negative gearing.
  • The Government won’t proceed with the announced tax cut for large companies. The tax cut for small companies is planned to proceed, in one form or another.
  • It seems likely the Government will introduce a levy on bank deposits, which may be passed on to depositors.
    • Treasurer Hockey has confirmed this in an interview with the AFR, saying there will be other “integrity measures” around “welfare and
      tax generally.”
  • A ‘Google tax’.
    • Though previously rumoured it is now being speculated that this won’t be in the Budget.
  • The Government may impose GST on more online purchases, and may lower the $1,000 threshold.
    • The Australian is reporting that the Government has chosen not to impose a tax on physical goods ordered from overseas, but will still tax digital goods, such as Netflix, pending an agreement with the states over the level of the GST. The Temporary Budget Repair Levy will, apparently, not be extended.
    • The Fairfax papers are reporting that the GST will apply to Netflix-type services and other digital downloads.
  • Details of the childcare package have been released, ahead of the budget.
  • The Budget will include tax concessions for startups.
  • The Government has announced some of the Jobs and Small Business package.
  • In addition to the tax cut for incorporated small businesses, unincorporated ones will be able to claim new tax deductions.

This article will be updated as we get closer to Budget night.

Update: What superannuation changes to expect in the 2015 Budget

Last updated: 12/05/2015

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1 thought on “Budget 2015 rumours: Superannuation & SMSFs”

  1. SMSF owners did not make the rules for SMSF, the governments of the times did for quite some decades, SMSF owners were offered reward for making the effort to safe, so as to sustain their own retirement.

    Some current government members, and members of the public in general might hold the opinion that SMSF owners are ripping the system off, when all these SMSF owners did was work hard and save for their own retirement by responding to the reward the governments offered to them for making the effort and NOT relying on the system to support them once retired

    This is why its sacrilege to change the SMSF system in any circumstances for those that made the effort and fully expected the governments to stand by their word

    To belatedly tamper with what they previously committed to for a very long time only high lights their total lack of integrity and reliability

    It’s really quite pathetic in that they seem to have no shame in going back on their words of encouragement to those willing to make the effort to free up the public purse in their retirement years

    Seems the saying is true “those that endeavour to be successful in Australia and disliked and penalised for their efforts

    This is not about tax but simply the breaking of the word of the government, the Aussie hand shake the man to man thing , how can they live with them selves, we were all brought up in this country with the above principles instilled in us fro school says and our parents

    Change if you will for the future, but don’t frig with the past that you yourself created in good faith

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