Treasurer flags more changes to lifetime non-concessional contribution cap

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Federal Budget 2016/17, $500,000 lifetime non-concessional contributions capTreasurer Scott Morrison has flagged further changes to the $500,000 lifetime non-concessional contributions cap policy announced in the 2016 Budget.

The Treasurer has already set out some exclusions from the lifetime cap. In a radio interview on 2GB he said there would be more included in the draft legislation to be released shortly.

“I have already outlined what some of those changes were even during the election campaign. So, one of them, if you get a pay-out as a result of an accident or something like that then that is exempted from the $500,000 cap. If you have entered into a contract before Budget night to settle on a property asset out of your self-managed super fund and you are using after tax contributions to settle that contract – well, that won’t be included. There are other measures that will be in the exposure draft legislation and that will be coming out shortly,” Mr Morrison told Ray Hadley.

Asked about lifting the $500,000 cap amount the Treasurer said the cap would affect about 42,000 people – “that is less than one per cent of the superannuants in this country”.

“Now, they are on higher incomes, have higher balances, have already benefited significantly from the generous tax contribution and other concessions that exist from superannuation and the argument they are making is – I want more. I want to put more in so I don’t have to pay as much tax as someone else is on those earnings. So, look, I think this is a fair measure and I stand by the measure,” the Treasurer said.

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3 thoughts on “Treasurer flags more changes to lifetime non-concessional contribution cap”

  1. Asked about lifting the $500,000 cap amount the Treasurer said the cap would affect about 42,000 people – “that is less than one per cent of the superannuants in this country”.

    “Now, they are on higher incomes, have higher balances, have already benefited significantly from the generous tax contribution and other concessions that exist from superannuation and the argument they are making is – I want more. I want to put more in so I don’t have to pay as much tax as someone else is on those earnings. So, look, I think this is a fair measure and I stand by the measure,” the Treasurer said.

    Rubbish!!! Prior to retirement post 2007 and acting on the advice of my Financial Advisor, I withdrew my modest $250,000 in Super and redeposited it back into my Super account. I saved Not a penny redepositing the $250,000! I then withdraw this sum and gave it to my two daughters to help with their wedding a deposit on their house. My backup is an investment property in the country worth about 300,000.

    Wally can you have a guess how much post tax money I can NOW deposit into my virtually nil Super balance??? What ever it is it is going to be $250,000 minus the post tax money in my original $250,00.

    My $500,000 life time post tax cap may mean that I end up with a Super balance of just $100,000!!!!

    So I feel so lucky to be

    ‘on higher income’ being retired,

    ‘have higher balances’ yeah right,

    ‘have already benefited significantly from the generous tax contribution and other concessions that exist from superannuation and the argument they are making is – I want more. I want to put more in so I don’t have to pay as much tax as someone else is on those earnings. So, look, I think this is a fair measure and I stand by the measure,” the Treasurer said.

    Is the Treasurer for real????

    I want more of what exactly???? I save no tax putting in post tax money into Super. I have a virtual nil balance and effectively I can’t put any more into Super because of these retrospective Super changes!!!

    I am not calling poor mouth but calling it for what it is: Betrayal of a lost conservative voter who has worked ever day since leaving school till retirement!!!

  2. Peterrj,

    Sadly you are not alone. The recontribution strategy was commonly recommended to people with relatively small account balances, no one foresaw this retrograde step in superannuation.

    The treasurer’s bluster is not meant to be factual. It is purely political and meant to denigrate anyone who opposes the policy change.

    I refuse to refer to these change as a “reform” as it is no more than a budget balancing exercise and is not based on proper superannuation research.

    Most super Safe Withdrawal Rate (SWR) research is pointing to a sharply lower SWR which requires a much higher initial balance to maintain a comfortable lifestyle. The model the government is using appears to use outdated SWR information otherwise the government would not be touting a $1.6m maximum balance and reducing the contribution rates to be point where this limit cannot be reached in the future.

    Bob

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