Indications that lottery winnings will be exempted from the $500,000 lifetime non-concessional cap have been labelled “farcical” by the SMSF Owners’ Alliance.
“Reports that the Turnbull Government is contemplating an exemption to superannuation contributions from lottery wins are farcical and, if true, deeply unfair,” says a statement by the organisation.
The Treasurer has indicated that there will be further exemptions to the lifetime non-concessional contributions cap included in the draft legislation, to be released shortly.
The AFR reports that these ‘life events’ will include divorce settlements and lottery wins.
“Why should the lucky winner of a lottery get a break over hard working Australians who are doing their best to support themselves in retirement and avoid being a burden on the taxpayer?” asked the SMSFOA.
“Giving an exemption to lottery winners is the most absurd twist yet to a policy that is riddled with unfairness and unintended consequences.”
“If an exemption to the contribution limit is given to lottery winners, why not to punters who have a big win at the races or the casino?”
“If you are fortunate to win the lottery and pay no tax on your winnings then good luck to you. But it would be totally unfair for you to then be able to make a larger contribution to your super than everyone else.”
“If the new, back-dated limit of $500,000 on non-concessional contributions, which we oppose, is to remain in place, then it should apply to everyone.”
“There may be a case (although we are yet to be convinced) for people who have seen their superannuation reduced because of a divorce settlement to be able to make up the difference but there is no justification for lucky lottery winners to get another free kick. We are more concerned for the many who have made retirement plans based on an injection of funds into super from downsizing their homes or from selling other assets but now find their retirement savings plans stymied by a retrospective limit on contributions.”
The SMSFOA has previously welcomed the announcement by the Treasurer of ‘transitional arrangements’ around the lifetime non-concessional cap, including for SMSFs that have entered into a contract to purchase an asset or putting LRBAs on an arm’s length basis. However the SMSFOA still expressed concerns around the policy.
“Instead of pursuing a dud policy, the Cabinet should renew the consultation process it halted abruptly by abandoning the Tax White Paper before even as much as an options paper had been produced and re-engage with the superannuation constituency,” said the SMFSOA.