5 moratorium on tax changes to Australia's $1.5 trillion super
CHRIS Bowen has declared there will be a five-year moratorium on any new tax changes to Australia's $1.5 trillion superannuation industry but made it clear that a controversial tax on pension earnings above $100,000 a year was intended to go ahead.
The move is one of about seven measures that the government had tabled in parliament before the change of prime minister but have not yet been debated.
The moratorium measure, which trumps a Coalition promise not to impose any unexpected deleterious measures on super, is generally popular since several industry bodies had called for the government to stop tinkering with super and remove it from the annual budget process, which the Treasurer said would now be the case.
Speaking at the Financial Services Council's annual conference in Brisbane, Mr Bowen said that "changes already announced by the government will stand and will be legislated in due course".
The controversial measure, which was one of several announced by the then minister for financial services and superannuation Bill Shorten in April, aims to impose a 15 per cent new tax on the very small number of retired people on pensions that pay more than $100,000 a year.
Sydney-based super tax expert Tony Negline said he was "amazed that they would want to keep going with that $100,000 pension policy", adding that the measure seemed to have been based on the annual budget process that Mr Bowen was so keen to get superannuation away from. "I'm surprised they didn't take this opportunity to go back to the drawing board on this one," Mr Negline said.
David Whiteley, chief executive of the Industry Super Network, said the moratorium was particularly good news for the 3.5 million Australians earning less than $37,000 a year who will benefit from what is called the Low Income Earners' Tax Concession, which he said was the only super concession available to those people.
"Saving for retirement is a lifelong proposition, and people need to have confidence that the rules are going to stay broadly the same," he said.
There will be mixed feelings among the superannuation savers who had been hoping to put away more than $25,000 a year on a pretax "concessional" basis, as the rules currently stand for people under 60. People that age and over may sock away $35,000, and that age threshold will come down to 50 next year.
.