Federal Treasurer Scott Morrison proposed a lifetime cap of $500,000 on non-concessional superannuation contributions, effective from budget night and backdated to 2007.
This proposal has been met with increasing community and political backlash, including from within the Liberal party, on the basis that it would have retrospective effects.
Most recently, Coalition MP George Christensen has threatened to cross the floor over the government’s proposed superannuation changes, saying the measures would “punish people for funding their own retirement”.
So far, two exemptions to the cap have been confirmed – those with pre-existing LRBAs, and those receiving personal injury payouts.
More are expected to come, and KPMG tax partner Dana Fleming says one of the obvious circumstances in which the government may allow exemptions around the cap is where individuals have worked overseas for a significant amount of time and want to get their super back to Australia.
Ms Fleming noted that individuals were previously able to contribute $540,000 every three years, and they could get most of that money into their super.
“Now you can’t do that, so I think the government will definitely have to deal with that. If they want Australians to bring their retirement savings back to Australia, then there is a need to cater for that, and the current measures that have been announced don’t,” she said.
“It would certainly be in the interests of the Australian superannuation system to have that money in Australia and supporting our financial system, rather than offshore.”
Others, like Samantha Comer from mid-tier firm Crowe Horwath, believe there may be more carve-outs on the horizon for the cap, including for divorced couples, farming families and those receiving inheritance from deceased estates.
“It’s going to be extremely hard for [Prime Minister Malcolm Turnbull] to apply any change retrospectively, given the fact there’s 12 senators that are non-aligned, effectively. Labor was pretty firm that they didn’t like the retrospective approach. Most of the 12 senators are pretty firm they don’t like the retrospective approach,” Ms Comer said earlier this week.
Miranda Brownlee is the deputy editor of SMSF Adviser, which is the leading source of news, strategy and educational content for professionals working in the SMSF sector.
Since joining the team in 2014, Miranda has been responsible for breaking some of the biggest superannuation stories in Australia, and has reported extensively on technical strategy and legislative updates.
Miranda also has broad business and financial services reporting experience, having written for titles including Investor Daily, ifa and Accountants Daily.