Treasury Laws Amendment (More Flexible Superannuation) Bill 2020 entered the Senate this week after first being introduced into Parliament in May this year.
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.
The amendments to the bring-forward rule were initially intended to commence from 1 July 2020; however, the legislation has been delayed, with Parliament unable to sit on a regular basis due to COVID-19.
This placed some SMSF clients who turned 65 this year in a conundrum about whether to trigger the bring-forward rule.
BT head of financial literacy and advocacy Bryan Ashenden said while the bill hasn’t progressed quite as quickly as the industry would have liked, “much of the debate so far shows support for the bill”.
“With some luck, we may be able to bring some clarity on this important planning issue [this] week,” Mr Ashenden said.
With today the last day Parliament is sitting for the month of September, Colonial First State executive manager Craig Day said if the bill does not pass the Senate today, the next scheduled sitting for both the lower and upper houses is not until 6 October.
“So, if it doesn’t get through by 3 September, then we’re going to have to wait till at least October for these rules to be announced,” Mr Day said.
One potential issue arising from the passage of the legislation, said SuperConcepts executive manager SMSF technical and private wealth Graeme Colley, is the date of effect and whether transitional arrangements will be put in place for those who may not have been able to access the bring-forward rule.
“This would apply to anyone who was not able to make non-concessional contributions greater than the standard amount prior to reaching the age of 67 and will not meet the work test in this financial year,” Mr Colley said.
Hi John,
That seems to be the current regime of excess non-concessional contributions where the excess contributions can be released tax-free and the associated earnings on the excess contributions (deeming earnings around about 8%) are added to taxable income and taxed at MTR with a 15% rebate. So not sure whether the Assistant Minister is doing anything special there rather just passing on the way the current rules work for excess non-concessional contributions.
Hi John, Thats great news.
I dont suppose you would able to forward me a copy of the written assurance?
As reassurance to those who may have made non concessional contributions in anticipation of this legislation being passed with an effective date of 1 July 2020, I have received written assurance from the office of the Assistant Minister for Superannuation that should the legislation fail to pass as proposed, excess contributions can be withdrawn without tax and any earnings on those contributions in the interim would be taxed at personal marginal tax rates.