After the Treasury Laws Amendment (More Flexible Superannuation) Bill 2020 was introduced into the Senate on 31 August, Pauline Hanson’s One Nation party put forward three amendments for the bill.
The bill which will enable Australians aged 65 and 66 to make up to three years of non-concessional superannuation contributions under the bring forward rule, has since remained in the Senate.
Speaking to SMSF Adviser, Australian Executor Trustees senior technical services manager Julie Steed said that many people are still unaware of what these proposed amendments are.
“Trying to understand the policy intent behind them is curious, to say the least. The legislation is very well drafted but there just doesn’t seem to be any understanding of the policy intent behind it,” said Ms Steed.
One of the amendments, she said, is to enable older Australians to make additional concessional contributions.
Under the amendment, those aged 67 would be able to make an additional $10,000 in concessional contributions in addition to their normal cap. Those aged 68 would be able to put in an extra $20,000, those aged 69 could contribute an extra $30,000, while those aged 70 would be able to contribute an additional $40,000 in additional concessional contributions. Anyone age 71 or over would be able to contribute an additional $50,000 in concessional contributions.
“If you think about the policy intent, I think most practitioners would prefer a situation where if you're going to give older Australians the ability to make additional concessional contributions, that you would do that for people who are still under 65, not over 65,” said Ms Steed.
“We used to have a higher concessional cap for the over 50s to acknowledge that once school fees and mortgages are paid down, that's when you have extra capacity to catch up your super savings. I think its much more likely that people in that bracket would have disposable income.”
Australians aged over 65, on the other hand, are not as likely to have additional disposable income, she explained.
“So its a bit difficult to understand the policy intent. If you do have extra money, its likely to be from something like selling an asset or you have very high income because you have a high investment base that's earning income,” she noted.
“So, it may not be from being physically employed but it may come from investment income. So again, the ability for wealthier individuals to have higher access to super seems to fly in the face of all the other policies. It would only be the wealthy who could take advantage of it.”
The not-to-be-missed Accountants Daily Strategy Day will travel through Melbourne and Sydney in August to equip accounting professionals with the latest industry updates and tips for modern practice management as well as the latest cutting-edge technology, processes, strategies and trends shaping the future of accounting. Visit the website for more information: www.accountantsdaily.com.au/strategy-day