Government may cap superannuation contributions at $20,000

Nest egg, superannuaiton, SMSF, retirement
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superannuation concessional contributions cap, $20,000, Government, Budget 2016/17The Government is planning to cap concessional superannuation contributions at $20,000 a year, according to reports.

The Fairfax papers are reporting that the Federal Government is “preparing to abandon serious tax reform,” with only changes to superannuation and negative gearing to fund income tax cuts. These tax policies are “due to be presented within weeks”, which would be ahead of the 2016/17 Budget.

Reportedly the changes to superannuation will include reducing the concessional contributions cap to $20,000 from the current general cap of $30,000 and “looking at” reductions to the non-concessional contributions cap.

The Government was apparently considering taxing superannuation contributions at the marginal tax rate of the individual, with a rebate. However this has been rejected as it would have increased taxes on contributions for people with taxable incomes between $37,001 and $80,000 – from 15% to 17.5%, potentially fuelling an attack from the Opposition.

Recent weeks have seen a great deal of speculation about possible changes to superannuation, much of it seemingly driven by sources inside the Government. This included allowing low income earners to opt-out of superannuation, cutting the CGT discount for superannuation funds and stopping increases to the Super Guarantee rate. Though it is not uncommon to see ideas floated in the media ahead of a Budget.

Prior to the last Federal election the Coalition had promised a Tax White Paper process, with the resulting tax reform package to be taken to the next election. However this process has been abandoned in favour of announcing tax policy in the Budget.

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