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Super wishlist: what the industry hoped for

In the lead up to the 2019 Budget, there were hundreds of submissions sent to the Treasury on how our taxes should be collected and how government income should be spent.

We take a look at what the superannuation industry suggested, in particular focussing on any changes proposed to the current super regime. None of the significant changes were adopted.

Self-Managed Super Fund Association (SMSFA)

Contributions

  • An increase in tax deductible contributions from $25,000 to $35,000 p.a. if you are 50 years or older.
  • Allow you to contribute to super up to age 75 without having to meet a work test once you reach 65.

Super balances

  • Allowing a couple to even out their super balances which will allow both to use the $1.6 million pension cap more effectively.

Benefit withdrawals

  • Allowing the many varieties of pensions that have evolved over time to be converted to account-based pensions. For most, this would mean just one type of pension to be paid, to help simplify the super system.
  • Allowing transition to retirement pensions to convert to account-based pensions when you meet a retirement condition of release of age 65.

Fund administration

  • Simplifying the contribution rules so that SMSF trustees/members who move overseas for a short period can be treated on the same basis as members of larger super funds. This mainly impacts on your ability to make contributions to your SMSF while you are overseas. The same situation does not occur with larger super funds.
  • No need for your SMSF to obtain an actuarial certificate where it is wholly in retirement phase for the year.
  • Re-introduction of SMSFs to choose when the assets are pooled or segregated for taxation purposes irrespective of your super balance. From 1 July 2017 many SMSFs had no choice but to use the pooled method.
  • Simplifying how child pensions are counted for purposes of the $1.6 million transfer balance cap.
  • Encourage the government to pass the legislation which requires it to take into account the objective of superannuation independently of the government’s budget process.

Chartered Accountants Australia and New Zealand

Contributions

  • Increase tax deductible contributions from $25,000 to $50,000.
  • Replace annual contributions with lifetime caps.
  • Introduce a once-off amnesty for employers who have not been paying the correct amount of superannuation guarantee contributions. Legislation is currently in the parliament to allow this to occur but has not been passed.

Super balances

  • Permit joint super accounts for spouses.

Benefit withdrawals

  • Allowing the conversion of previous types of pensions to account-based pensions. This would help simplify the super system.

Fund administration

  • No need for your SMSF to obtain an actuarial certificate where it is wholly in retirement phase for the year.
  • A review of binding death benefit nominations.

Tax & Super Australia

Contributions

  • Increase tax deductible contributions from the current $25,000 if you are 50 or older irrespective of your super balance.
  • Extension of the carry-forward concessional contributions for unused concessional contributions to be carried forward without any restrictions.
  • Removal of the work test for anyone aged between 65 and 75.
  • Insurance proceeds received by a fund member from temporary or permanent invalidity be contributed to super without any contribution limits applying. This would be similar to the treatment of structured settlement payments under the current rules.

Fund administration

  • Changes to the administration of the $1.6 million transfer balance cap concerning notification of tax payments.
  • Alternative dispute resolutions where an SMSF has suffered loss due to fraud or dishonesty.

Australian Institute of Superannuation Trustees (AIST)

Contributions

  • Abolish the minimum monthly superannuation guarantee income threshold of $450 so that all employees irrespective of earnings will have super paid for them.
  • Taxpayers eligible for the low-income superannuation tax offset receive an additional superannuation contribution.
  • Superannuation guarantee contributions be paid on parental leave payments.
  • Extension of superannuation guarantee to independent contractors and self-employed workers.
  • Increase the rate of superannuation guarantee earlier than the proposed program.

Super balances

  • Greater work by the Australian Taxation Office to reconnect super fund members with their lost super.

Fund administration

  • Establish a council to assess whether the superannuation system is delivering its objectives.
  • Including the right to superannuation as part of a person’s employment conditions.
  • Encourage the government to pass the legislation which requires it to take into account the objective of superannuation independently of the government’s budget process.

 

Graeme Colley is the Executive Manager, SMSF Technical and Private Wealth at SuperConcepts, a sponsor of Cuffelinks. This article is for general information purposes only and does not consider any individual’s investment objectives.

For more articles and papers from SuperConcepts, please click here.

 

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