The Turnbull Government has today released further Exposure Draft legislation and explanatory material for the superannuation reforms first announced in the 2016-17 Budget.
The reforms will make the superannuation system fairer, more flexible and more sustainable. The majority of Australians – 96 per cent of individuals with superannuation – will either be better off or unaffected as a result of these changes.
Around a quarter of fund members (including many low income earners) will benefit from the Government’s superannuation package.
This tranche of Exposure Drafts include legislative amendments to:
Implement the Government’s $1.6 million transfer balance cap, which places a limit on the amount an individual can hold in the tax-free retirement phase;
- Make the taxation of concessional superannuation contributions more sustainable, by lowering the concessional contributions cap to $25,000 per year and reducing the income threshold at which individuals are required to pay an additional 15 per cent contributions tax, from $300,000 to $250,000;
- Provide greater flexibility for those with broken work patterns by allowing individuals with balances of less than $500,000 to ‘carry forward’ unused concessional cap space for up to five years;
- Encourage the development of innovative retirement income products to provide more choice and flexibility for retirees;
- Ensure that transition to retirement income streams are accessed for the purpose for which they were designed and not for tax minimisation;
- Abolish the out-dated anti-detriment provision, which effectively result in a refund of a member’s lifetime superannuation contributions tax payments into an estate; and
- Apply commensurate treatment for these measures to defined benefit schemes and constitutionally protected funds.
The release of exposure draft legislation and explanatory material on the remaining measures will follow in coming weeks. The Government remains on track to have these measures introduced into the Parliament before the end of the year. This will provide taxpayers with certainty so they can make decisions about their savings and superannuation with confidence. With the support of the Senate, there will be no impediment to this occurring.
The Exposure Draft Bill and Explanatory Memorandum is available on the Treasury website. Submissions will close on Monday 10 October.