Superannuation changes - Federal Budget 2017/18
Changes to superannuation were announced in the Federal budget on 9th May 2017. These super changes are not law yet as they are still in the legislative process but it is well worth considering how your plans might be affected.
On September 14th 2017 the Federal Government introduced a bill that will seek to close a legal loophole that allows employers to shortchange employees who make extra salary sacrifice super contributions.
Closing this loophole is a welcome step that shows progress is being made to tackle widespread Super Guarantee non-compliance, but a more comprehensive approach is necessary given the salary sacrifice changes will only help one in ten of those affected by unpaid superannuation.
Allowing older Australians to contribute downsizing proceeds into superannuation
From 1 July 2018, individuals aged 65 and over will be able to make a non‑concessional contribution of up to $300,000 in proceeds from the sale of a principal residence, held for at least 10 years, into their superannuation. These new contributions will be in addition to any other voluntary contributions that people are able to make under the existing contribution rules and concessional and non-concessional caps.
Merging of the Superannuation Complaints Tribunal and other financial complaint services into a single complaints Authority
The government has proposed merging of the Superannuation Complaints Tribunal with the Financial Ombudsman Service and the Credit and Investment Ombudsman into a single Financial Complaints Authority. The new body will deal with all financial disputes, including superannuation, and provide binding dispute resolution, and will be funded by industry.
Super fund governance
On September 14th 2017 the Federal Government introduced a bill to make changes to the requirements of super fund board members. This includes mandating one-third independent directors on boards, an independent chair and would require funds to explain why they do not have a majority of independent directors on their boards.
Industry SuperFunds equal representative model of employer and member representatives on boards has been a proven success delivering strong returns to members. These proposed legislative changes will seek to dismantle this successful model. Industry SuperFunds oppose this change.
Choice of fund
On September 14th 2017 the Federal Government introduced a bill that would extend choice of fund arrangements to those who currently choose their superfund through collective bargaining in EBAs.
Imputation credit changes
The Federal Opposition have announced a proposal to cease refunding unused imputation credits. This has resulted in widespread media commentary on the impact on retirees. See our explainer on the issue and how fine-tuning the policy could reduce or remove the impact on pensioners with small and moderate parcels of shares.