Article from Hon.

Kelly ODwyer, MP Minister for Small

Business and Assistant Treasurer

The Turnbull Governments Superannuation Measures Myth Busting

The Government is committed to ensuring the super system is sustainable, flexible
and has integrity.
The objective of superannuation, as recommended by the Financial System Inquiry,
is to provide income in retirement to substitute or supplement the Age Pension.
This objective, which will for the first time be enshrined in legislation under a reelected Turnbull government, has been an important anchor for the development of
the superannuation package in the 2016-17 Budget.
We will make changes to the superannuation system that will provide greater
flexibility, better target tax concessions, and reduce the extent to which the
superannuation system can be used for tax minimisation and estate planning.
While the changes relating to the caps have received much of the media attention, I
would like to highlight a number of changes that will increase the flexibility of the
system and will support the accumulation of super for people with interrupted work
patterns, particularly women.
From 1 July next year, people with superannuation balances under $500,000 will
have greater access to the concessional cap. They will be able to roll over their
unused annual caps over five years and use them to make catch up contributions.
From 1 July 2017 we will simplify contribution rules for older Australians by lifting
restrictions, including the work test, on their ability to contribute to their
superannuation and to that of their spouses.
Anyone under 75 will be able to claim an income tax deduction for personal
superannuation contributions to an eligible fund, up to the $25,000 cap. Currently, an
income tax deduction for personal superannuation contributions is only available to
people who earn less than 10 per cent of their income from salary or wages. This will
help the partially self-employed and those whose employers dont offer salary
sacrificing arrangements to have the same access to superannuation tax
concessions enjoyed by the rest of the population.

We are also replacing the Low Income Superannuation Contribution, which expires
on 30 June next year, with a Low Income Superannuation Tax Offset. This will mean
low income workers will generally not pay more tax on superannuation contributions
than on their take-home pay. Available to those earning $37,000 or less, this is
expected to benefit 3.3 million people, including 2 million women in 2017-18.
Were extending the current super spouse tax offset by increasing the income
threshold from $10,800 to $37,000, to help families support each other by topping up
savings.
And we will remove taxation barriers to the development of new retirement income
products such as deferred life time annuities from 1 July 2017. This will enable
retirees to buy products, such as deferred lifetime annuities that they can rely on for a
particular level of income for the rest of their life. These will be of particular benefit for
those who are concerned that they might outlive their superannuation fund savings.
The Turnbull government acknowledges that some of the other changes announced
in the Budget will reduce the very generous tax concessions for people on high
incomes and with larger superannuation balances. This is appropriate, and better
meets the objective of providing income in retirement to substitute or supplement the
Age Pension.
It should be noted that 96 per cent of the population will either be unaffected or better
off under these changes, and superannuation still remains a very attractive
investment.
There are a couple of things Id like to point out about the changes.
There will be no penalty for those who have made more than $500,000 in nonconcessional contributions prior to Budget night and their funds can remain in their
superannuation. Only future non-concessional contributions will be restricted.
There will be no penalty for those who have already transferred more than $1.6
million into the retirement phase before 1 July 2017. Any amounts that exceed the
cap can continue to be held in superannuation, in an accumulation account, where
the earnings will be concessionally taxed.
I would also like to highlight that Labor is also proposing changes to the taxation of
superannuation.
Labor proposes to tax superannuation earnings in the retirement phase. Under
Labor, earnings above $75,000 on superannuation balances will be subject to 15 per
cent tax.
In contrast, under the Coalition, earnings in retirement phase accounts will continue
to be tax-free.

The Turnbull government is committed to making the superannuation system more

sustainable and flexible over the years ahead, and the superannuation changes will
deliver this.