The return of the Coalition means that some of the more substantive changes to superannuation settings proposed by Labor will not be implemented.
These include Labor's policies to: lower the high-income super contribution tax threshold from $250,000 to $200,000, lower the annual non-concessional contributions cap from $100,000 to $75,000, make widely-discussed changes to franking credits, and to give higher priority to increases to the superannuation guarantee.
We discuss some of the key superannuation changes flagged by the Coalition below.
Increases to the superannuation guarantee
The compulsory super guarantee, currently at 9.5 per cent, is slated to start increasing by 0.5 per cent each year from July 2021 until it reaches 12 per cent by 1 July 2025. This is consistent with the freeze on increases until 1 July 2021 that was introduced by the Abbott Government in 2019.
The Government has given no indication it intends to continue the freeze. The Government's position can however be contrasted with Labor's stated position, which was to increase the guarantee to 12 per cent 'as soon as practicable' (and to continue towards its original objective of 15 per cent).
Increase age for contributions to super without passing the work test
Australians aged 65 and 66 will be able to make voluntary superannuation contributions, both concessional and non-concessional, without meeting the work test. Under the current law, they can only make voluntary contributions if they meet the work test, which requires that they work a minimum of 40 hours over a 30 day period.
Increase age for the bring-forward rule
The bring-forward rule allows Australians aged under 65 to bring forward three years of non-concessional contributions totalling up to $300,000, into one income year. The Government will now give Australians an extra two years to make large contributions into super, by extending the scheme to anyone aged under 67 years.
Increase age for spousal contributions
Further, the age limit for making spousal super contributions has been increased from 69 to 74 years. Under the current law, Australians aged 70 and over cannot receive contributions made by another person on their behalf.
Response to Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry and other changes
In advance of the election, the Federal Parliament had already started legislating responses to the Royal Commission's recommendations, together with other significant changes, in the Member Outcomes and Protecting Your Super legislation (amongst others).
As super fund trustees continue to work busily to address these changes, the enhanced level of regulatory oversight should continue to be viewed as the 'new normal' for all industry participants.
This publication does not deal with every important topic or change in law and is not intended to be relied upon as a substitute for legal or other advice that may be relevant to the reader's specific circumstances. If you have found this publication of interest and would like to know more or wish to obtain legal advice relevant to your circumstances please contact one of the named individuals listed.