Govt gives clarity on key super budget question
Assistant Treasurer Kelly O’Dwyer has shed light on how the government plans to proceed with current exemptions for personal injury payouts, should the proposed pension phase and contribution cap measures come into legislation.
Speaking at Tax Institute event in Sydney last week, Ms O’Dwyer said the government is aware that certain individuals will be affected by the proposed changes to superannuation in the budget and plans to consult extensively on all legislation that it brings in prior to implementation.
The government she said has a clear commitment to that, particularly given that it is a "significant reform package".
"We know that there will be some people who will be caught by the changes, and we need to make sure where there are unintended consequences, that we are able to properly deal with those in the legislation," she said.
"We have taken a very conscious decision to exempt structured settlements and court orders for personal injury payments from both the $1.6 million transfer cap, and with the lifetime [$500,000] non-concessional cap," added Ms O’Dwyer.
Ms O’Dwyer said this was important as these sorts of payments were very important for people who have high health costs, and daily needs.
"That’s just one example I can give you," she said.
Last week, KPMG director Ross Stephens suggested this would be the case, noting he sees "no reason" why the carve out will not continue if the lifetime cap comes into effect.
Ms O’Dwyer argued that the coalition's reforms for superannuation overall will make the superannuation system "fairer for women and older Australians" and disputed the argument that the changes are retrospective.
"The government’s changes are all prospective, the government’s changes on the $1.6 transfer balance cap, apply prospectively from the first of July 2017, and on the $500,000 non-concessional lifetime cap," she said.
"We have made it very, very clear, that those people that contributed money after tax into superannuation before Budget night, are completely grandfathered."
Miranda Brownlee is the deputy editor of SMSF Adviser, which is the leading source of news, strategy and educational content for professionals working in the SMSF sector.
Since joining the team in 2014, Miranda has been responsible for breaking some of the biggest superannuation stories in Australia, and has reported extensively on technical strategy and legislative updates. Miranda has also directed SMSF Adviser's print publication for several years.
Miranda also has broad business and financial services reporting experience, having written for titles including Investor Daily, ifa and Accountants Daily.