When does the Preservation Age increase?

Update: Preservation age for superannuation has started to increase

The National Commission of Audit (NCOA) has recommended an increase in the superannuation preservation age, but if the documents released are any indication the transition period is likely to cause confusion.

On the 1st of May the National Commission of Audit report was released, among other recommendations, includes an increase in the superannuation preservation age, to bring it closer to an also proposed increase in the age pension age. Currently the superannuation preservation age is set to increase to 60, while the age pension age is set to increase to 67:

Comparison Superannuation Preservation Age and Age Pension Age

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IPA: Increase contributions caps, remove work test & 10% rule

SMSF & Superannuation NewsThe Institute of Public Accountants (IPA) has made a number of recommendations for improving the superannuation system to the Financial System Inquiry:

  • Increasing the Concessional Contributions Cap
  • Maintaining the Low Income Superannuation Contribution (LISC)  or increasing the Co-Contribution
  • Removing the 10% rule for personally deducted concessional contributions
  • Removing the work test
  • Introducing a “life-time concessional contributions cap”
  • Introducing a deductible spouse concessional contribution
  • Policies to encourage annuities and life pension products
  • Increase access to a low rate cap lump sum, changes to taxation of withdrawals above a limit
  • Increase the amount that can be withdrawn under the hardship provisions
  • Lower the minimum pension draw-down limits
  • Remove the requirement for a bare trust under a  Limited Recourse Borrowing Arrangement
  • Move the Small Business Superannuation Clearing House to the jurisdiction of the ATO
  • Increase the employee limit of the clearing house to 100
  • Allow for employee superannuation to be paid through BASs

The full submission can be found here (PDF) which includes many other, non-super, recommendations.

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Current State of Superannuation Changes – April 2014

Superannuation Legislation & Updates

An update on the current state of superannuation changes passed, working their way through parliament, or un-legislated.

 

Passed

Deeming Rules

The extension of the deeming rules to Account-Based pensions was passed as part of the Social Services and Other Legislation Amendment Bill 2013.

Pending

Superannuation Guarantee and Low Income Super Contribution

Two announced super changes are contained in the Minerals Resource Rent Tax Repeal and Other Measures Bill 2013, the slowing of the increase to the Superannuation Guarantee and the cancelling of the Low Income Superannuation Contribution. However this bill is currently marked as ‘Not Proceeding’ on the APH website, due to it not passing the Senate. It is expected this bill will reappear in one form or another in 3 months time or after the new senate takes over.

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Will there be a review of SMSF Borrowing and LRBAs?

SMSF borrowing property - limited recourse borrowing arrangement LRBAComments by the then Assistant Treasurer Arthur Sinodinos seem to have put to an end to the long-expected review into SMSF Limited-Recourse Borrowing Arrangements (LRBAs). However there is still support for such a review in the submissions so far to the Financial System Inquiry.

The Cooper Review (Super System Review) made the following recommendation in regards to SMSF borrowing and LRBAs:

Recommendation 8.10: The 2007 relaxation of the borrowing provisions and the consumer protection measures that have recently been announced should be reviewed by government in two years’ time to ensure that borrowing has not become, and does not look like becoming, a significant focus of superannuation funds.”

As the Cooper Review was released in 2010 this would have meant a review of LRBAs by 2012. It appears from the Review Paper that the thinking behind the above recommendation was that the changes to SMSF borrowing were “still recent”. The announcement by the government of the intention to make LRBAs Financial Products under the Corporations Act seems to have also influenced the Panels thoughts on the matter. However it is now over four years since that announcement and the proposed changes have not been implemented. The Panel did seem to be concerned about SMSFs borrowing, believing it to be “inconsistent with Australia’s retirement policy” and wanted to ensure that “borrowing does not become a significant focus of SMSFs”.

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FSI Submissions – Preservation Age

The Financial System Inquiry (the Murray Inquiry) has begun to release the submissions received, several of them have raised the issue of increasing the superannuation Preservation Age and aligning it with the Age Pension age. The Financial Services Council recommends “the superannuation preservation age be increased”, noting the findings of the Grattan Institute that increasing both the… Read More »FSI Submissions – Preservation Age

SuperStream: Important Dates

Update: the ATO has announced ‘compliance flexibility’ for small businesses which miss the SuperStream deadline.

SuperStream is part of the Stronger Super reforms designed to improve administrative efficiency in the superannuation system and reduce costs, partly by moving from paper-based records to electronic transactions. In stages, beginning 1 July 2013, APRA super funds, SMSFs and large and small employers will transition to using SuperStream for exchanging information regarding superannuation contributions and rollovers. The following important SuperStream dates come from the Superannuation Data and Payment Standards 2012 and ATO publications:

 

Important Dates for SuperStream

 

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