Minister for Financial Services and Superannuation Bill Shorten has confirmed the government’s intention to introduce legislation supporting two of its superannuation changes announced in April.
It believes the changes will encourage Australians to contribute more to their superannuation later in life while allowing investors to withdraw or retain excess concessional contributions without penalty.
“The government believes that it is important to allow people who have not had the benefit of the Superannuation Guarantee for their entire working lives to have the ability to contribute more to their super as their retirement age approaches,” said Shorten.
The proposed legislation will bring forward the start date for the new higher concessional contributions cap to July 1, 2013 for people aged 60 and over. Individuals aged 50 and over will be able to access the higher cap from July 1, 2014.
“This means Australians reaching retirement age during the next financial year can contribute up to $10,000 more to their super at the concessional tax rate,” Shorten said.
An exposure draft of the legislation to bring forward the start date of the new concessional contributions cap has been released today for consultation is available here.
Separately, the government will seek to introduce legislation that allows individuals to withdraw any excess concessional contributions made from July 1, 2013 from their superannuation fund without penalty.
Under the proposal, government will tax excess concessional contributions at the individual’s marginal tax rate plus an interest charge, rather than the top marginal tax rate.
“This reform will ensure that individuals are taxed on excess concessional contributions in the same way as if they had received that money as salary or wages and had chosen to make a non-concessional contribution,” said Shorten.
At the moment, concessional contributions that are in excess of the annual cap generally are effectively taxed at the top marginal tax rate (46.5 per cent). This is a severe penalty for individuals with income below the top marginal tax rate.
Spot on RB. Also, what is the point of having a committee of people that are just going to tell you what you want to hear? Jobs for your mates?
I have never seen such a waste of time, money and resources. The cost this government has levied on the Financial Planning industry and therefore on consumers is just ridiculous and completely unnecessary.
Oh, I should add…how do you take the credit for increasing the cap from $25,000 to $35,000, saying “this will allow more Australians to contriubute more to their superannuation at the concessioanl rate”, when it was you who reduced it from $50,000 to $25,000 in the first place….??????
That’s like saying, I’m sacking all my staff today…then tomorrow saying “aren’t I a great employer, I’ve created 18 new jobs today” when I re-employ them.
Too little too late Mr Shorten.
At least this is an admission that you screwed up when you decided to reduce the rate at which people could contribute to super in the most tax eeffective way.
It’s easy to see why. The extra tax revenue you forecast by reducing the concessional caps is not going to be yours to spend after September, so you’re simply reducing the tax revenue available to the incoming government.
Let’s be clear. This is not because you’ve had a change of heart really is it? You’re just wanting to make it more difficult for the incoming government to balance the books, that’s all.
This is what all your policies are about and have been for some time. Trying to paint the new govt into a corner.