Govt’s reforms aim to depoliticise superannuation

The Federal Government has based its superannuation policy changes on a tax-free limit of $100,000 a year indexed to the Consumer Price Index. 

The Government said this meant that from 1 July, next year, earnings on assets supporting income streams would be tax free up to $100,000 a year for each year, with earnings above $100,000 being taxed at the same concessional rate of 15 per cent in the accumulation phase. 

The approach was outlined by the Treasurer, Wayne Swan, and the Minister for Financial Services, Bill Shorten, at a specially convened press conference this morning. 

Approximately 20,000 upper income earners would be impacted, according to Treasury. 

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The Government has also created a Council of Superannuation Guardians to depoliticise superannuation and to guide superannuation policy and ensure sustainability and adequacy. 

Shorten reinforced that the policy changes would not be retrospective and would impact those with balances over $2 million. 

The concessional contribution caps will increase to $35,000 for people aged over 60 and will be extended from 1 July, next year to people aged over 50. 

Further, the Government amended the excess contributions regime by allowing people to withdraw any over-commitments and have them taxed at their marginal tax rate. 

Shorten said the Government would also extend the normal deeming rules and extend the concessional tax on deferred lifetime annuities.