Federal-Budget, Walker Wayland

May 2018 3 Minutes

Budget 2018 – Possible changes to superannuation

Please note that the below are proposed changes and still need to go through Parliament in order to become law.  When going through Parliament details may change and may not even be passed.

Superannuation — increasing the maximum number of allowable members in self-managed superannuation funds and small APRA funds from four to six

The Government will increase the maximum number of allowable members in new and existing self-managed superannuation funds and small APRA funds from four to six, from 1 July 2019. This will provide greater flexibility for joint management of retirement savings, in particular for large families. The measure is estimated to have no revenue impact over the forward estimates.

Superannuation — preventing inadvertent concessional cap breaches by certain employees

The Government will allow individuals whose income exceeds $263,157 and have multiple employers to nominate that their wages from certain employers are not subject to the superannuation guarantee (SG) from 1 July 2018. The measure will allow eligible individuals to avoid unintentionally breaching the $25,000 annual concessional contributions cap as a result of multiple compulsory SG contributions. Breaching the cap otherwise results in these individuals being liable to pay excess contributions tax, as well as a shortfall interest charge.

Employees who use this measure could negotiate to receive additional income, which is taxed at marginal tax rates. Due to this, the measure is estimated to have a gain to revenue of $2.0 million over the forward estimates period through the timing of income tax collection, which is collected sooner than excess contributions tax.

 Superannuation — three-yearly audit cycle for some self-managed superannuation funds

The Government will change the annual audit requirement to a three-yearly requirement for self-managed superannuation funds (SMSFs) with a history of good record-keeping and compliance. This measure will reduce red tape for SMSF trustees that have a history of three consecutive years of clear audit reports and that have lodged the fund’s annual returns in a timely manner.

This measure will start on 1 July 2019 and, to ensure smooth implementation, the Government will consult with stakeholders.

The measure is estimated to have no revenue impact over the forward estimates period.

 Work test exemption for recent retirees

The Government will introduce an exemption from the work test for voluntary contributions to superannuation, for people aged 65-74 with superannuation balances below $300,000, in the first year that they do not meet the work test requirements.

The work test exemption will give recent retirees additional flexibility to get their financial affairs in order in the transition to retirement. Currently, the work test restricts the ability to make voluntary superannuation contributions for those aged 65-74 to individuals who self-report as working a minimum of 40 hours in any 30 day period in the financial year.

This measure will take effect from 1 July 2019 and is estimated to have a cost to revenue of $10.0 million over the forward estimates period.

Source: The Commonwealth of Australia