The Law Council of Australia says the Government’s superannuation changes are “extremely complicated” and asks if super fund members will understand the operation of the new rules.
The Law Council of Australia’s Superannuation Committee, in a submission to a Senate inquiry, also said the complexity of the Transfer Balance Cap rules is not consistent with the subsidiary objective of superannuation to ‘be simple, efficient and provide safeguards’. Though this objective is contained in the Superannuation (Objective) Bill 2016, which is unlikely to be passed by the Parliament in 2016.
The submission says the “unduly complex” rules will burden the superannuation industry with increased administration and compliance costs and create uncertainty for individuals trying to understand the tax implications on their retirement plans.
The Law Council says that it is unlikely that fund members will be able to track, potentially over decades, the pension commencements, commutations and other events as required by the Transfer Balance Cap regime.
“This will be made considerably more difficult for members with multiple accounts across multiple funds.”
The Council also notes that the changes to the non-concessional contributions cap will require super fund members to track their total superannuation balance across all superannuation interests.
“These measures are inherently complex, but will need to be applied correctly by individuals who wish to make non-concessional contributions, to successfully use the ‘bring forward’ facility, and commence and manage pensions.”
The Law Council says it shouldn’t be necessary for individuals to incur the costs of engaging an adviser just so they can “understand the fundamental features of tax law that they will be required to comply with when saving for retirement” and “understand the extent to which they can contribute actively towards their retirement savings”.
The Treasury Laws Amendment (Fair and Sustainable Superannuation) Bill 2016 is scheduled for debate in the House of Representatives on Tuesday, and in the Senate on Wednesday. The Senate inquiry into the Bill is also due to report on Wednesday.