May Budget to ring in super changes
The Federal Government is expected to announce a number of key changes in the May Budget aimed at overcoming what are regarded as unintended consequences around the so-called ‘Simpler Super’ regime and the excess contributions tax (ECT).
If the Government delivers on the expected changes it will be consistent with lobbying from virtually every major financial services group in circumstances where some clients have inadvertently found themselves in breach of the excess contributions rules - with the result that the amount was taxed at an accumulative rate of 93 per cent.
The changes will also reflect concerns expressed by the Commissioner for Taxation, Michael D’Ascenzo (pictured), who made clear to the industry that the ability of the Australian Taxation Office (ATO) to exercise full discretion on inadvertent breaches was limited.
“The law places strict limits on the application of the discretion which may only be applied where there are special circumstances and the decision is consistent with the objectives of the relevant tax laws,” D’Ascenzo told an industry conference.
While the Government is not expected to accede to calls by organisations such as the Self-Managed Superannuation Fund Professionals’ Association of Australia (SPAA) to return contribution caps to pre-2009 levels, it is expected to tidy up some of the issues identified by D’Ascenzo and the ATO.
The Assistant Treasurer and Minister for Financial Services, Bill Shorten, has re-stated the Government’s intention to restore the $50,000-a-year contribution cap for those aged over 50 and with less than $500,000 in super assets, starting from the middle of next year, but the SPAA and a number of other organisations have asked the Government to go further.
However, in circumstances where the Treasurer, Wayne Swan, has spent most of the past month signalling a tight Budget, most industry lobbyists believe that whatever superannuation-related concessions are delivered on 10 May will be at the margin.
They said they would count it as an achievement if the Government tied up the unintended consequences around ECT and perhaps extended the concessional contribution cap arrangements for those over 50 to include people with up to $750,000 in super savings.
AUTHOR
Mike Taylor
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