The Government should consider “real life” issues when consulting on the $500,000 superannuation lifetime cap, DBA Lawyers believes.
DBA Lawyers director, Daniel Butler, and lawyer, Philippa Briglia, said in an analysis that one of the most disturbing aspects of the $500,000 lifetime non-concessional contribution (NCC) cap announced in the Federal Budget was that it caught prior NCCs made since 1 July 2007.
Butler and Briglia said the Government should remove the retroactive application of the cap as soon as possible despite the Government denying the retrospectivity.
Butler and Briglia said they hoped the real life issues would be considered were:
The global financial crisis (GFC) as many taxpayers who previously contributed more than $500,000 by the way of NCCs have lost more than 50 per cent on their investments as a result of the GFC;
- Divorce as taxpayers may have previously reached their $500,000 NCC cap and subsequently transferred or forfeited all or part of their super balance as part of their property settlement with their former spouse. It is not clear how members can then rebuild their balance for their retirement;
- Fraud as many self-managed super funds (SMSFs) and members have been the subject to fraudsters or other scams since mid-2007; and
- Foreign superannuation funds (FSF) in its announced form as the $500,000 lifetime NCC cap applies in relation to transfers to Australian super funds.
On the FSFs, the analysis said: “Since the Budget, we understand from numerous sources that there has been a significant decline in such transfers”.
“Many may leave their foreign super money overseas due to the lifetime cap and associated costs, complexity and uncertainty. This would be unfortunate, as FSF transfers to Australia should result in greater investment and growth in Australia,” it said.
