The Government has started releasing draft legislation for its super changes announced in April.
The first to be introduced is the proposal to bring forward the start date for the new higher concessional contributions cap to 1 July 2013 for peopled aged 60 plus. The cap will be available to people aged 50 and over from 1 July 2014.
“The Government believes that it is important to allow people who have not had the benefit of the Superannuation Guarantee for their entire working lives to have the ability to contribute more to their super as their retirement age approaches,” said Financial Services Minister Bill Shorten.
“This means Australians reaching retirement age during the next financial year can contribute up to $10,000 more to their super at the concessional tax rate,” he said.
The Government will also seek to introduce legislation which allows individuals to withdraw any excess concessional contributions made from 1 July 2013 from their superannuation fund without penalty. It will tax excess concessional contributions at the individual’s marginal tax rate plus an interest charge, rather than the top marginal tax rate.
“This reform will ensure that individuals are taxed on excess concessional contributions in the same way as if they had received that money as salary or wages and had chosen to make a non-concessional contribution,” said Shorten.
At the moment, concessional contributions that are in excess of the annual cap generally are effectively taxed at the top marginal tax rate (46.5 per cent). This is a severe penalty for individuals with income below the top marginal tax rate.
“These measures will improve the fairness, adequacy and efficiency of Australia’s world-class superannuation system for the future,” Shorten said.
Submissions for the draft legislation are open until Monday 13 May.