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Hewison Insights

Super still the best way to accumulate wealth for retirement despite proposed changes

Glenn Fairbairn
Director/Private Client Adviser
29 Aug 2016

With Federal Parliament resuming this week, all eyes will be focused on Scott Morrison and the outcome of the Government’s proposed changes in superannuation announced in May’s Federal Budget.

Given the Labor Party has indicated that it will oppose a number of the proposals, it seems likely that the Turnbull Government will be in for some tough negotiating with the minor parties in order to drum up enough support to add approximately $2.9 billion to the budget’s bottom line over the next four years.

Until now, the Labor Party has supported the following measures:

  • Reduction of the concessional contribution cap from $30,000 to $25,000 from 1 July 2017;
  • Removal of tax exemptions on super fund earnings when members are drawing a transition to retirement income stream;
  • Introducing a $1.6 million cap on all new, and existing superannuation pensions. Any excess can remain in super but earnings are taxed at 15 per cent;
  • Threshold to increase from $10,800 to $37,000 for spouse contributions, which provides an 18 per cent tax offset on the first $3,000 of contributions to superannuation on behalf of a spouse.

Proposals which are not supported by the Labor Party include:

  • The ability for members who acquire less than $500,000 in superannuation to carry forward unused concessional contributions on a rolling five-year basis;
  • Only supporting the $500,000 lifetime non-concessional contribution cap ‘prospectively’ from the budget night – 3 May 2016. This contradicts the government’s proposal to count all contributions from 1 July 2017;
  • The removal of work tests for those aged 65 to 74. Currently, individuals are required to work 40 hours over a 30-day period to be eligible to contribute;
  • The removal of the ten per cent rule allowing individuals to make concessional contributions of $25,000 per annum regardless of their employment status.

Following the election, it is becoming apparent that Treasurer Scott Morrison is not open to negotiating the government’s budget proposals however, it is likely that some compromises will be required in order to pass through the majority of the expected changes. The government has indicated the changes will involve more incentives and flexibility.

Overall, the advisors at Hewison Private Wealth are accepting that the tax concessions provided by superannuation have been very attractive for a long period of time, and that some ‘balancing’ was required. However, we believe the proposal to include non-concessional contributions made from 1 July 2007 in the lifetime cap is an unfair decision that will have the greatest effect on Australians.

In our opinion, notwithstanding the above possible amendments, superannuation should remain the most tax efficient and sustainable method to accumulate and preserve assets for your retirement.

Regardless of the outcome, it is essential that you consult your advisor to adequately determine how to take full advantage of the remaining tax concessions for your individual circumstances and maximise your super.

The information provided above is general information only and individuals should seek specialised advice from a qualified financial adviser. Please contact Hewison Private Wealth for more information.


Hewison Private Wealth is a Melbourne based independent financial planning firm. Our financial advisers are highly qualified wealth managers and specialise in self managed super funds (SMSF), financial planning, retirement planning advice and investment portfolio management. If you would like to speak to a financial adviser on how you can secure your financial future please contact us 03 8548 4800, email info@hewison.com.au or visit www.hewison.com.auPlease note: The advice provided above is general information only and individuals should seek specialised advice from a qualified financial advisor. The views in this blog are those of the individual and may not represent the general opinion of the firm. Please contact Hewison Private Wealth for more information.