Concerns have been raised about the complex changes to superannuation announced in the 2016 Budget.
While the Budget has been broadly welcomed some measures are likely to increase the complexity of the superannuation system.
“SMSFs, in particular, are used by those people who are prepared to take responsibility for their superannuation, but with the measures introduced in tonight’s budget they will be wondering whether it is worth the effort.”
“They rightly thought the system has been settled, especially when both political parties said in the run-up to the 2013 federal election that they were ruling out any significant changes to superannuation. But this clearly isn’t the case.”
Long also said the $1.6 million transfer balance cap is a backwards step.
“Although I am hardly surprised by this measure, especially as it has Labor’s support in principle, the reality is it will prove a complex measure that will be hard to administer.”
Chartered Accountants of Australia and New Zealand (CAANZ) said the $1.6 million transfer balance cap is a “complex proposal” which “runs the risk of becoming difficult and costly for the super industry, investors and the Tax Office to administer.”
CAANZ is also “disappointed” by the announced $500,000 lifetime non-concessional cap.
“This will unfairly impact those who had been planning to use the current rules in the near future and now find find themselves disadvantaged because access has been blocked.”
“The Government should consider delaying the start date of this measure and not have it apply for all contributions made since 1 July 2007 but from its revised start date.”
The Budget is also being criticised for retrospective changes to superannuation. In particular the lifetime non-concessional contributions cap, which includes contributions from 1 July 2007 – though only contributions after the Budget can trigger an excess – and the transfer balance cap, which applies to existing pension accounts.
The Labor Shadow Minister for Financial Services and Superannuation, Dr Jim Chalmers, pointed to previous statements by the Treasurer that changes to superannuation would not be retrospective.
The Treasurer told 2GB in November 2015: “Well, what we want to make sure of with superannuation is that we need to respect the fact that people have been saving under particular rules over a long period of time that there is nothing that punishes or penalises them retrospectively on any of these things. I mean that is one of those iron clad rules about when you look at these systems.”
After his National Press Club address the Treasurer was asked why the $1.6 million transfer balance cap was not a retrospective change.
“The simple thing is I have not changed the tax treatment of retirement accounts,” answered the Treasurer.
“Those retirement accounts, those retirement accounts in the retirement phase remain tax free. We are not taxing the earnings out of retirement phase accounts. Full stop. What we’ve done is we’ve set a limit on what can go into those retirement accounts. That’s a different position. And it’s one I’m very comfortable with. I’m not uncomfortable with the fact that we put a cap on how much can go into a tax-free earnings investment made possible by the taxpayer. But I have not changed the tax treatment and nor do I propose to change the tax treatment of retirement phase superannuation accounts.”