Reducing concessional cap will send shock waves
The Federal Government's decision to decrease the superannuation concessional contribution cap down to $25,000 will send "shock waves" through the self-managed super fund (SMSF) sector that thought the structure of the system had been broadly settled.
Such was the view of the SMSF Association on the 2016 Federal Budget announced on 3 May, with the Association stating that this, combined with other measures was the most significant change to the super system since the 2007 Budget.
The Association's chief executive and managing director, Andrea Slattery, also expressed disappointment over the fact that increased tax on concessional contributions for high income earners had been lowered from people earning $300,000 and above down to those earning $250,000 and above.
"Although we expected this change and see it as a reasonable targeting of super tax concessions, what makes it disappointing is that's happening in addition to concessional contribution caps being reduced," Slattery said.
Slattery also said that while the Association supported the Government's decision to enshrine the objectives of super, it should have been done so before significantly altering the tax treatment of super.
"In addition, we believe that changes to super should have been part of a broader, coherent review of the tax system, rather than singling out one form of savings for changes," she said.
The Association welcomed the Government's decision to remove the 10 per cent rule for personal deductible contributions as well as the work test for contributions made by those aged between 64 and 75.
"Also, we are pleased that the Government is going to maintain a more equitable treatment for low income earners by introducing the Low Income Superannuation Tax Offset to replace the Low Income Superannuation Contribution," Slattery said.
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