Treasurer signals watering down of caps designed to curb the use of super as a tax minimisation measure

This article is more than 4 years old

This article is more than 4 years old

Scott Morrison has confirmed draft legislation for superannuation changes will include exemptions for major life events, in effect watering down caps designed to curb the use of super as a tax minimisation measure.

In an interview on 2GB on Monday, Morrison outlined potential changes to the super reforms but played down their significance by claiming he had flagged them before the election.

The Coalition policy, taken to the 2 July election, would place a $500,000 lifetime cap on after-tax non-concessional superannuation contributions backdated to 2007.

Morrison said there were at least two technical changes that would be revealed in the draft legislation, to be released shortly.

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“I’ve already outlined what some of those changes were, even during the election campaign: one of them, if you get a payout as a result of an accident ... that is exempted from the $500,000 cap,” he said.

“If you’ve entered into a contract, before budget night, to settle on a property asset out of your self-managed super fund and you’re using after-tax contributions to settle that contract, well that won’t be included.

“There are other measures that will be included in the exposure draft legislation and that will be coming out shortly.”

The exemptions mark a substantive change to the policy since the election, before which Morrison was at pains to say there would be no changes.

On 26 July the treasurer said one change that he had canvassed during the election campaign was an exemption for contributions up to $1.9m for sale of small businesses and their assets by people over 55.

Since the election, the policy has come under fire from conservatives within the Coalition, including threats from MP George Christensen to cross the floor and warnings from senator Eric Abetz the policy cost it support from its base.



That led to indications from Malcolm Turnbull the government could consider look at “transitional and implementation” aspects, including possible changes to exempt gifts and inheritance from the lifetime cap.

According to reports, allowing exemptions for life events could cost the budget between $300m and $450m.

Asked whether he would lift the cap, Morrison in effect ruled it out by replying: “The only people that would benefit would be people that already, on average, have $2m in their superannuation scheme, have already put $700,000 in after-tax contributions.”



He nixed the idea that allowing people to put $1.2m after tax into their superannuation at the lowest rate of tax was “somehow the great fairness thing to do”.

“I don’t know too many people ... sitting there with a bag of $500,000 which they want to put in their superannuation fund,” he said. “I don’t know these people. There are about 42,000 in the country and that’s less than 1% of the superannuants in this country.”

Morrison said these people “are on higher incomes, have higher balances, have already benefited significantly from the generous tax contribution and other concessions for superannuation.

“The argument they’re making is: I want more.”

The treasurer rhetorically asked how he could look parents in the eye who were slated to lose the family tax benefit supplement in July, who “earn a lot less”, and instead protect those who wanted to put more than $500,000 a year into their super.

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Labor wants the proposed superannuation changes to be reviewed, particularly to determine whether they are retrospective or not.

The Council of the Ageing’s chief executive, Ian Yates, has argued against watering down super changes, because it would amount to caving in to “the complaints of a privileged minority”.

Morrison called on the crossbench senators to consider budget savings to help retain Australia’s AAA credit rating and reiterated his call for Labor to pass $6.5bn of “zombie” budget measures currently blocked in the Senate that the opposition had said it would implement if elected.

The treasurer noted credit ratings agencies had warned they may have to downgrade Australia’s rating and said every blocked savings measure made it harder to keep the AAA rating.