What are Labor’s superannuation policies heading into the 2019 Federal election?
No new or higher taxes on superannuation
Labor leader Bill Shorten has joined Scott Morrison in promising no new or higher taxes on superannuation. Though he later qualified this to mean in addition to already announced policies, and argued that reducing tax concessions was not a tax.
Additionally, Shorten said: “We have no proposals other that what we’ve already announced previously.”
Stop refunds of excess franking credits
Labor would stop refunds of excess franking credits, with exemptions for Age Pensioners. While not exclusively applying to super funds, Labor estimates the policy will impact 200,000 SMSFs in addition to some larger super funds.
Lower Non-Concessional Contributions Cap to $75,000
One of the previously announced Labor policies is to lower the Non-Concessional Contributions cap to $75,000, from its current level of $100,000.
Stop ‘catch-up’ contributions
Labor would stop the ‘catch-up’ contributions brought in by the Coalition – which allow some people to carry forward unused contribution cap for use in later years. Labor has described this as a “loophole”.
Stop expanded tax deductability for personal super contributions
Another “loophole” Labor intends to close is reversing the Government’s changes to tax deductability for personal superannuation contributions. This likely means reinstating the ‘10% rule’ the Coalition repealed. The rule limited the ability to deduct personal superannuation contributions to people who earnt less than 10% of their income from employment – effectively meaning most employees couldn’t claim tax deductions for personal super contributions.
Lower Division 293 threshold to $200,000
Labor would lower the Division 293 threshold, which it calls the High Income Superannuation Contribution threshold, from $250,000 to $200,000. The Div 293 threshold reduces the tax concession on super contributions for people with income over the threshold.
Ban SMSF borrowing
In 2017, Labor announced the policy of banning borrowing by SMSFs using Limited Recourse Borrowing Arrangements (LRBAs), on a prospective basis.
Phase out $450 Super Guarantee threshold
Labor announced in September 2018 that it would phase out the $450 minimum monthly threshold to receive Super Guarantee contributions. This is to start from 1 July 2020. The timetable for this phase-out is unclear, though may involve the threshold falling by $100 a year.
Pay super on Paid Parental Leave
At the same time as announcing the policy of phasing out the $450 threshold, Labor announced that it would have the government pay the superannuation contributions of recipients of Commonwealth Paid Parental Leave and Dad and Partner Pay payments.
This payment would start from 1 July 2020.
Phase out First Home Super Saver Scheme
Labor plans to close the First Home Super Saver (FHSS) Scheme to new entrants, according to its costings document. Though details around this policy remain unclear.
Add super to the National Employment standards
In December 2018, Labor announced the policy of adding superannuation to the National Employment Standards. Labor says this would make it easier for employees to pursue unpaid superannuation without depending on the ATO.
Labor would also increase penalties for employers who underpay or don’t pay Super Guarantee and also strengthen the ATO compliance regime.
Easier to make extra contributions for staff
Labor has also announced that it will amend the Sex Discrimination Act to ensure that employers can make higher superannuation contributions for female employees.
The Australian Human Rights Commission will be asked to advise on the details.
Statements of impact of super policies on women
Labor had originally announced that it would “improve transparency by committing to consider and publish the impact that any future changes to super would have on women”.
However, later policy documents say that Labor’s Council of Superannuation Custodians will consider and report on the impact on women of any super changes it recommends.
Labor would also release an annual women’s budget statement.
Council of Superannuation Custodians
The above would require Labor to create its Council of Superannuation Custodians, which was originally announced in 2013.
Originally the Council was meant to ensure that changes to super were consistent with the Charter of Superannuation Adequacy and Sustainability.
“The Charter will be developed against the principles of certainty, adequacy, fairness and sustainability. The Charter will clearly outline the core objects, values and principles of the Australian superannuation system,” said a statement by Bill Shorten in 2013, when he was Minister for Financial Services and Superannuation. This is similar to the later recommendation of the Financial System Inquiry for a legislated objective for super.
“The Council will be charged with assessing future policy against the Charter and providing a report to be tabled in Parliament. The Council will provide an annual report on the superannuation system against the Charter which will also be tabled in Parliament.”
Objective of Super
According to media reports, Labor would seek to set an objective for superannuation in legislation. This was a recommendation of the Financial System Inquiry, which was established by the Coalition. Despite adopting the recommendation the Coalition has failed to advance the legislation through the Senate, in part due to disagreements over what the objective should be. It is likely Labor would not support the same objective as the Coalition.
This list will be updated throughout the 2019 election campaign. Last updated 10/05/2019.
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