Following speculation that the government may look to implement major changes to the taxation of super in the federal budget this year, Senator Jane Hume has promised there “will be no adverse changes to taxes in superannuation” at a recent Tax Institute conference.
The Morrison government issued a guarantee that it would not implement new taxes on superannuation in the lead-up to the federal election in 2019, following measures announced by Labor to scrap cash refunds on dividend imputation credits, changes to the Division 293 tax threshold and lower non-concessional contribution caps.
The Coalition introduced significant changes to superannuation in 2016 including the $1.6 million transfer balance cap.
Following the economic fallout from COVID-19, however, a number of industry commentators in the superannuation space have predicted that the government may look to make significant policy changes to the age pension system and taxation rate for superannuation as it grapples with the ballooning budget deficit.
While Senator Hume said the government is standing firm on its election promise of no adverse changes to taxes in super, there continues to be “necessary tinkering within the regulatory settings for superannuation”.
“This does not necessarily mean instability and uncertainty for members. It simply means that our superannuation funds are held to the highest standards of accountability and transparency,” she said.
Despite some of the delays with the Treasury Laws Amendment (More Flexible Superannuation) Bill 2020, Senator Hume said passing the bring-forward measure for over-65s “remains a priority” for the Coalition.
Once legislated, the bill will allow eligible individuals to utilise the bring-forward rules up to age 67, currently 65, without satisfying the work test and without being treated as an excess non-concessional contribution.
“In light of the many uncertainties that COVID has brought on and the changing nature of work, it is more important than ever that we provide flexibility for people to save for their retirement,” she said.
She also stated that the government remains committed to legislating the technical amendments to actuarial certificates announced in the 2019–20 federal budget.
In the budget last year, the government has announced a proposal to allow superannuation funds with interests in both accumulation and retirement phases during an income year to choose their preferred method of calculating exempt current pension income (ECPI).
The government also plans to remove a redundant requirement for superannuation funds to obtain an actuarial certificate when calculating ECPI using the proportionate method, where all members of the fund are fully in the retirement phase for all of the income year.
