Time to wipe away super legacy issues
Major accounting firm Deloitte has pointed to a legacy issue with respect to the superannuation regime that existed before June 30, 2007, which is precluding many people from contributing more to their super to take advantage of the so-called ‘better super’ system.
According to Deloitte, because of the structure of the old superannuation regime, many people have put in place arrangements to ensure they do not receive superannuation support from their employers, and an unfortunate side effect is that these people are also unable to claim a tax deduction for personal superannuation contributions.
It said that, as a result, the question now being asked by many people is whether they can have their employer contribute into superannuation for them, despite having previously made an irrevocable election.
As well, Deloitte believes that the same people are now asking whether they can make personal tax-deductible contributions into superannuation.
Deloitte is suggesting that people affected by issues arising from the previous superannuation regime need to review their employment contracts and consider entering into discussions with their employers about voluntarily recommencing superannuation contributions.
It said that while employers were under no obligation to do so, they were unlikely to incur any additional cost because all such contributions are now fully tax deductible to the employer.
Deloitte said the great benefit to people affected by legacy issues is that the restriction on making personal tax-deductible contributions into superannuation had been excluded from the new legislation and, as a result, individuals could now make tax-deductible contributions regardless of having previously made an election.
It suggested that this would assist individuals who had previously made an election but now had limited if any employment income but did have significant other income from business dealings, rentals, capital gains, dividends and trust distributions.
AUTHOR
Mike Taylor
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