Speaking in a recent webinar, DBA Lawyers director Daniel Butler said with a new government now elected, there is some concern that there could be some policy surprises in the October budget this year.
“According to Treasurer Jim Chalmers, we are going to have an October budget and another budget in May next year so we’ve got an ongoing period of uncertainty,” noted Mr Butler.
Mr Butler said Labor has said very little about any potential superannuation policies but has flagged that it will look to toughen the rules around the collection of superannuation guarantee (SG).
“While that’s a worthy thing, the penalties that can be imposed on an employer or person that doesn’t pay their SG are already tremendous, it could put you out of business overnight. So I’m not sure whether adding additional penalties is the right thing,” he said.
While Labor ruled out introducing new superannuation taxes in super during the most recent election, Mr Butler reminded SMSF professionals that Labor has floated a number of policies impacting the super sector in the past.
For the May 2019 election, Labor proposed reducing non-concessional contributions to $75,000, reducing the Division 293 tax threshold to $200,000, scrapping carry-forward contributions and re-introducing the 10 per cent rule for claiming a tax deduction for a personal contribution.
During the 2016 election, Mr Butler noted that Labor discussed introducing a $75,000 cap for the tax-free amount that a person could receive in respect of a pension.
“If you look at what the Coalition government did in mid-2017, they brought in the transfer balance cap, the total superannuation balance and substantially limited the contribution caps,” he said.
“This is the trouble. It’s like a patchwork quilt. You get a government in, they do this and tinker with that and we end up with a shemozzle. There’s been no real focus on reform – it’s been a knee-jerk reaction of pulling something out of the back pocket and running with it,” he said.
With the system already incredibly complex, Mr Butler said he hoped the next government will focus on a longer-term vision.
Given the uncertainty that can be caused by a change in government, Mr Butler said advisers should be using disclaimers that make it clear that the advice they’re giving is only based on what the law is today.
“Advisers’ disclaimers should always state that the information or advice provided is based on the law today and the law in this area is subject to constant and unpredictable changes,” said Mr Butler.
“For instance, there is recent publicity seeking to cap the total amount that a person can hold in superannuation at no more than $5 million. Currently, there are a number of SMSFs with more than $100 million.
“Hopefully we get some clarity from government before we move along those lines.”
