The first tranche of the Exposure Draft legislation for superannuation released by the Federal Government did not address the most controversial measures proposed in the 2016 Federal Budget, but focused on enshrining the super objective, and other less contentious issues.
In a joint release with the minister for revenue and financial services, Kelly O'Dwyer, Treasurer Scott Morrison said four per cent of super members would be affected by the changes, while around a quarter of fund members, including many low income earners, would benefit from the super package.
However, the first tranche did not discuss the more controversial measures such as the $500,000 lifetime limit on post-tax contributions, the $1.6 million cap on tax-free pension accounts, and a $25,000 annual limit on pre-tax contributions.
Draft bills on these measures were still the subject of discussion and would be released at a later date. The $500,000 lifetime limit has been particularly controversial for what was thought to be its retrospective nature, where contributions made since 2007 would count towards the cap.
The first tranche of draft legislations would:
- Enshrine the super objective in legislation, which was to provide income in retirement that would substitute or supplement the Age Pension;
- Introduce the Low Income Superannuation Tax Offset (LISTO), which would add to the super balances of 3.1 million low income earners, including 1.9 million women. This would ensure members did not pay more tax on their super contributions than on their take home pay;
- Improve access to concessional contributions by letting people under age 75 to claim a tax deduction for personal super contributions, regardless of employment arrangements. The Government said this would help those who were partially self-employed, partially wage and salary earners and for those whose employers did not offer salary sacrifice arrangements; and
- Remove restrictions on people aged between 65 and 74 to make voluntary contributions to their super, which would benefit 40,000 older workers.
"The Government has consulted with a range of stakeholders on the objective of superannuation and in the development of legislation to implement the 2016-17 Budget superannuation reforms," Morrison said in a statement.
"This policy was taken to the election. The release of exposure draft legislation and explanatory material on the remaining measures will follow in coming weeks."