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Dear Paul,

Superannuation & Retirement Policies for the 3 Major Political Parties

We have reviewed the policies for Superannuation by the 3 major political parties. AustAsia Group manages and advises on over 180 Self Managed Superfunds, and in addition to that, has over 200 superannuation clients that we review and manage overall. We estimate the following number of superfunds that we look after will be adversely affected by the policies as follows:

  • Australian Labor Party - 25% will be affected and worse off
  • The Greens - 50% will be affected and worse off
  • Liberals/Nationals (Coalition) - 6% will be affected and worse off

This is only based on our clients, and not on the entire population.

Labor Policies at a Glance
What When Comment
Pension income of more than $75,000 a year to be taxed July 1, 2017 Earnings above $75,000pa will attract a 15% tax rate.
Our projections are that, at least, 25% of the SMSFs we manage, will be adversely affected by this change (a large number of Super Funds).
Reduction in contributions tax threshold for high earners from $300,000 to $250,000 July 1, 2017 People earning over $250,000 will pay 30% contributions tax on concessional contributions above $25,000.
Continuation of low income super contribution Was set to expire June 2017 Those with an income of $37,000 or less, get a refund of pre-tax contributions, capped at $500. Labor has previously said it wants this continued.

Bill Shorten, in his Budget-Reply speech on 5 May 2016, confirmed that the ALP would not reverse the “harsh” Age Pension changes taking effect from 1 January 2017, due to budgetary constraints.

The Greens at a Glance
The Greens propose a new contributions tax system as set out below:
Income plus super Marginal Tax Rate Super Contribution Tax Rate
$0 - 19,400 0 cents 0 cents
$19,401 – 37,000 19 cents 4 cents
$37,001 – 100,000 33 cents (37 cents from $80k) 15 cents
$100,001 – 150,000 37 cents 22 cents
$150,001 onwards N/A 30 cents
$180,001 onwards    

Table source: The Greens website

The Greens support the retention of the $30,000 concessional contributions cap, but are with the Coalition on scrapping the strategy to take a transition-to-retirement pension, while salary sacrificing.

Note: The Greens supported the Age Pension changes taking effect from January 2017. This affects more than 300,000 retirees, and hundreds of thousands future retirees. Perhaps cutting the income of Age Pensioners is not tackling the “wealthy” issue.

Coalition Policies at a Glance
What When Comment
Cap of $1.6 million on transfer balances to pension phase July 1, 2017 Individuals will only be able to contribute up to $1.6 million to their pension phase, which is tax free. Any excess will have to be transferred back into an accumulation fund, which is taxed at 15%, or held in their personal name.
We estimate that 6% of the SMSFs we manage will be affected by this change.
$500,000 lifetime cap on non-concessional contributions Effective immediately (from budget night) Only $500,000 in after-tax contributions can be made over a lifetime. The lifetime cap will take into account all non-concessional contributions made on or after 1 July 2007.
Reduction in concessional contributions cap to $25,000 for all July 1, 2017 Currently, you can put in $30,000 if you’re 49 and under or $35,000 if you’re 50 and over.
Over 65 work test scrapped July 1, 2017 The work test means you have to work 40 hours over a consecutive 30-day period before you make a contribution. The government wants to scrap it for people aged 65 to 74.
Changes to transition to retirement July 1, 2017 Earnings in a transition to retirement pension will no longer be tax exempt and will be taxed at 15%.
Spouse contributions offset lifted Was set to expire June 2017 You can now claim a tax offset of $540 a year for non-concessional contributions to a spouse earning up to $10,800. That will be lifted to $37,000 under the Coalition’s policy.
Continuation of low-income super contribution under a different name   Those with an income of $37,000 or less get a refund of pre-tax contributions, capped at $500. Renamed low-income superannuation tax offset.

We encourage you to get in touch with your local politicians & express your dissatisfaction, no matter which party you might support.

If you have any further queries, please feel free to contact our Client Services team on (08) 9227 6300 or email us at clientservices@austasiagroup.com.

With Compliments,

Simon Chesson
Director

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