SMSF trustees have come out as winners in the budget revelation that taxpayers will be able to withdraw excess non-concessional contributions made after 1 July 2013.
This is according to the SMSF Professionals’ Association of Australia (SPAA) which has praised the governments on removing what it calls “overly punitive outcomes”.
Until now, taxpayers could pay up to 93% on excess non-concessional contributions.
Jordan George, senior manager of technical and policy at SPAA said although the announcement is positive, there is still much work to be done.
“The government needs to work through the details of the proposal because the suggestion to allow taxpayers to withdraw earnings associated with the excess non-concessional contributions is likely to result in complex compliance requirements,” he said.
SPAA have also spoken positively about another of the superannuation budget measures, the decision to increase the Superannuation Guarantee (SG) rate to 9.5%, up from 9.25%.
This new rate will be effective as of 1 July, but will then be frozen until 30 June 2018, before rising in increments of 0.5% to reach a 12% limit.
George said he’s pleased superannuation members and employers will now have certainty about the rate, but the four-year freeze is not such great news.
“SPAA is disappointed that the SG rate will then be frozen for four income years instead of two as the government originally proposed,” he said. “The move to a SG rate of 12% is an important measure in ensuring that Australian’s have adequate superannuation balances.”
George also reiterated that in light of the announcement that the age pension qualifying age will rise to 70 by 2035, there now needs to be careful and considered debate about how the superannuation and social security system interact with this raise.
“Workers that are involved in physically intensive industries and those that sustain work-related injuries or are unable to work due to illness need to be catered for by a system with a higher age pension age,” he said.