Transition plans for Budget super changes questioned
Arrangements for the transition to the new superannuation system proposed in this year’s Federal Budget have come under question as the impact of the changes begins to sink in.
Superannuation commentator Craig Fishburn said the absence of legislation relating to the proposed changes was “the biggest pervasive issue” for the transition period, particularly for the capping of undeducted contributions, which took effect from Budget night.
“There is a significant impact, and yet trustees and their advisers have no firm footing upon which to act or advise,” Fishburn said.
He said when major changes had been previously announced in Federal Budgets, such as the prohibition of defined benefit pensions in the 2004 Budget, regulations were put forward immediately after the announcement.
“There is a history of forbearance from Treasury with some Budget announcements, and when they are serious they let everyone know by gazetting legislation. How do we treat the current Budget announcements?
“The integrity of the transition period will be undermined in the absence of more formality,” he said.
Following the Budget announcement, Federal Treasurer Peter Costello said the Government would use the Budget consultation period to consider transitional issues and tie up loose ends associated with the superannuation changes.
For example, he said the Government was willing to consider allowing people who had already drawn down on their superannuation savings to pay tax on those withdrawals only up until July 1, 2007, when the new policy is proposed for implementation.
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