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Category: Superannuation / Federal Government / Federal Parliament / Federal Elections

Government stands by proposed super changes

Wednesday, 11 May 2016 05:17:29 | Jane Norman

Mathias Cormann says the proposed changes would only affect about 4 per cent of superannuants. (AAP: Mick Tsikas)

The Federal Government is standing by its superannuation overhaul amid warnings from supporters, including the Institute for Public Affairs (IPA), that anger among Liberal members is "white hot".

Key points:

  • Government proposing tax increase on super contributions for the wealthy
  • Plans for $500,000 lifetime cap on after-tax contributions, backdated to 2007
  • Claims super changes will be retrospective
  • Gratten Institute backs the Government proposal

The Government is adamant the measures announced on Tuesday night would not be retrospective and would only affect about 4 per cent of superannuants.

IPA executive director John Roskam is preparing to launch a campaign against the changes and said emails had been flowing in from members, furious with the proposed changes.

"Phrases that people have used with me include disappointed, devastated, white hot with anger," he said.

The Government has proposed a raft of measures including increasing the tax on super contributions for the wealthy from July next year and for the first time, imposing a $1.6 million cap on the amount of tax-free super savings a person can hold in retirement.

Government's super changes not retrospective


If we adopted the definition of retrospectivity posited by Labor and the IPA, taxes could never be raised or lowered, writes Michael Janda.

It is also planning to introduce a $500,000 lifetime cap on the amount of after-tax contributions a person can make, backdated to 2007.

Finance Minister Mathias Cormann said anyone who had already reached that limit would not be penalised, but would not be able to make any further after-tax contributions.

Mr Roskam said that was clearly a retrospective change.

"The law as announced last Tuesday changes the nature of contributions that were made back to nine years ago," he said.

"For the Government to pretend these changes are not retrospective flies in the face of common sense, flies in the face of all legal analysis."

Senator Cormann said the Government would stand by the proposed changes, arguing they were fair and ensured the tax concessions were better targeted.

"Every additional revenue which has been raised by various revenue measures, including in superannuation, has been reinvested in tax cuts," he said.

The Minister said even with the proposed changes, the concessions were still "attractive" and created an "advantageous" tax environment.

Retrospective claims a 'furphy'

But the Grattan Institute's John Daley backed the Government, saying claims the changes were retrospective were a "furphy".

"Lots of changes affect investments made in the past, and no one suggests they are retrospective," he wrote in The Conversation.

"If I bought shares in a company yesterday, I expect that the future earnings on these assets will be subject to my marginal income tax rate.

"But if my income tax rates change, I would not expect that the old tax rate to be grandfathered to apply to all my future earnings."

Mr Daley said superannuation tax concessions had been "absurdly generous" to older people on high incomes for years and had not served the purposes of the system.

"Misguided claims about retrospectivity should not be used as cover so that this older generation continues to gain unjustifiable benefits that will now be denied to younger generations," he said.

Foreign Minister Julie Bishop has said the Government would be seeking feedback on any "unintended consequences" of the plan but today Senator Cormann ruled out any changes.

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