With the federal election well and truly passed and parliamentary sittings back on, you’re probably wondering on the status of the superannuation changes that were proposed in the Federal Budget more than a year ago, which appeared to disappear from sight.
While many of these Bills lapsed as a result of the election, the government has recently introduced two back into Parliament that contain measures which may impact on your super, however, there are some announcements that have not been reintroduced.
In this article, we discuss what’s currently going ahead and what yet hasn’t made it through.
1. Treasury Laws Amendment (2018 Superannuation Measures No 1) Bill 2019.
This Bill contains a raft of the previously lapsed measures and include the following:
- Employer shortfall exemption for high-income earners with multiple employers. Where an employee is likely to exceed the concessional contributions cap from compulsory super contributions from more than one employer, if passed, this will enable them to apply to the Commissioner for an exemption certificate for at least one of their employers and then have the opportunity to negotiate to receive the contribution as income instead. To be eligible, they must have more than one employer and be likely to have excess concessional contributions in the financial year.
- Adding outstanding LRBA values back to member balances This applies to self-managed superannuation funds. If passed, those super funds with borrowings entered into on or after 1 July 2018 for members in retirement phase or with related party loans will be affected. This will impact on members by increasing their total super balance by their portion of the borrowing.
- Including non-arm’s length expenses in the Non-Arms-Length-Income ‘NALI’ rules. Again, this relates to self-managed superannuation funds. This will impact super funds where the trustee provides services to their fund without charging (for example, preparation of accounts) and will only apply in situations where trustees are licensed to provide a particular service, for example if they perform this service to the general public. If the trustees are not paying for that service, the relevant portion of the income of the fund will be taxed at the top marginal tax rate, which is particularly nasty for funds not paying any tax due to paying pensions.
So, what isn’t included in this bill that has previously been tabled?
- SG Amnesty
- Increasing SMSF member limits from 4 to 6
2. Treasury Laws Amendment (2019 Tax Integrity and Other Measures No 1) Bill 2019.
Redefining salary sacrifice. This bill amends the SG Act to define salary sacrifice arrangements so that the specified salary is not reduced as a result of a salary sacrifice arrangement. If passed, this will mean employers won’t be calculating compulsory super (SG) on the reduced income (after the amount you have chosen to salary sacrifice has been deducted) and will instead be required to calculate your SG on your gross salary. Not all employers are reducing the income used to calculate SG for those with salary sacrifice arrangements in place currently, but some are. It is the employees of those employers who are set to benefit if this is passed.
While these changes still need to pass through Parliament, it’s a good time to start re-evaluating your circumstances.