The Coalition government recently raised the superannuation concessional contribution cap to $35,000, but the SMSF industry is at odds as to whether this is enough.
The SMSF Professionals’ Association of Australian (SPAA) feels strongly that the government should increase the concessional contribution cap, despite it being raised from $25,000 at the end of May.
SPAA has been advocating for a higher contribution cap than the $25,000 limit since it was slashed to that level in 2009, particularly for those over 50.
While the recent increase was appreciated, it needs to be set even higher to let superannuation savers make greater concessional contributions, says SPAA chief executive Andrea Slattery.
This is especially relevant to women and those with broken work patterns as a higher concessional cap will give them the chance to contribute more to superannuation whenever they can afford it most, she says.
But Industry Super Australia (ISA) believes while increasing the concessional contribution limit to $35,000 would improve the tax treatment of the savings, is unlikely to change the level of savings or the saver’s behaviour, because the individuals making this level of contributions are focussed on retirement saving.
“Super must be elevated above short-term politics as individuals need to have stability to be able to plan for the long-term,” an ISA spokesperson said.
"ISA has long held that tax settings should not be set on an item-by-item basis to address short term budget issues. Tax settings should arise as part of a long term plan to achieve adequate outcomes in retirement for the public that include tax concessions that are equitable – to ensure popular support and adequacy – and sustainable from a budget perspective.”
ISA says the benefits of these concessions are “skewed” towards those on high incomes with large accumulations and it sees retaining the low income super contribution as a much higher priority.
As the system now stands, in 2013-14 people aged 60 and over will be able to make up to $35,000 of concessional contributions to their superannuation, and from 1 July, 2014, people aged 50 and over will be able to contribute $35,000 as well.