Government mulls contribution caps changes

The Federal Government is considering introducing changes to its superannuation contributions cap regime to eliminate perceived discrimination against women and some part-time workers.

Consideration of the changes is understood to be taking place within the context of the May Budget and in reaction to a number of submissions made to the Henry Review of Taxation.

The changes are also reflected in ongoing submissions to the Cooper Review into superannuation.It was expected that the Henry Tax Review recommendations would be public at the end of February, but the Government has delayed their release and it is expected that little will be known before the middle of May.

However, recent data released by the Australian Prudential Regulation Authority suggests that the changes to the contributions caps introduced last year are now being reflected in lower levels of voluntary contributions.

The submissions to both the Henry and Cooper reviews have suggested that women who spend time out of the workforce, along with workers who work part-time and casual hours, are being subjected to discrimination by the existing rules applying to contributions caps.

The submissions suggested that this discrimination applies because the contribution caps impose a limit on the ability of those workers to catch up rapidly when they either resume their careers or find full-time employment.

There have also been suggestions that the Government should lift the contributions cap for people aged over 50 and who are deemed to have an inadequate superannuation balance.

A number of submissions have suggested that a change to the arrangements to eliminate discrimination against women and part-time workers could be achieved by utilising existing Australian Taxation Office processes.