The Association of Financial Advisers (AFA) has generally supported the passing of the Tax and Superannuation Laws Amendment (Increased Concessional Contributions Cap and Other Measures) Bill 2013 despite some reservations.
The new legislation increases the concessional contributions cap for older Australians while doubling the contributions tax rate for people earning over $300,000.
“The increase in the concessional contributions cap to $35,000 from July 1 this year for those 60 and over, and from July 1, 2014 for those 50 and over, will allow older Australians to better prepare for retirement,” AFA chief executive Brad Fox said.
“This measure will be very beneficial for those mature Australians who have the capacity to take advantage of it. However, while we are pleased that the legislation has been passed, we would prefer to have seen the higher cap for older Australians introduced as a permanent measure through indexation, rather than as a short-term measure.”
Fox added that the AFA does not support the increase in superannuation contributions tax for higher income earners.
“While we appreciate the current budgetary pressures on the government, we don’t support this measure, which acts as a disincentive for superannuation contributions and increases the overall complexity of the Australian superannuation system,” he said.
“This also has implications for attracting and retaining executive talent in Australia and can be seen as a disincentive for people to aspire to greater earnings.”
The SMSF Professionals’ Association of Australia (SPAA) also welcomed the passage of legislation to increase the concessional contribution cap to $35,000.
“We have been advocating higher concessional contribution caps since the 2009 Federal Budget when they were cut,” said SPAA chief execuutive Andrea Slattery. “In 2011, we coordinated an industry-wide letter and supporting submissions asking the government for a $35,000-cap for people over 50 years of age – and we will continue to advocate strongly for even higher caps.”
A statement from SPAA says the higher cap will now help Australians nearing retirement to contribute more to the superannuation, which is especially important for women and those who have had broken work patterns.
