MEMBER for Mallee Andrew Broad believe the federal government should modify or scrap one of its proposed changes to tax on superannuation to encourage workers’ aspirations.
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The 2016/2017 federal budget proposed, along with other changes, a $500,000 lifetime cap for non-concessional contributions.
“The lifetime cap will limit the extent to which the superannuation system can be used for tax minimisation and estate planning,” the budget papers stated.
“Currently, less than one per cent of superannuation fund members have made contributions above this cap since 2007.”
Mr Broad said the government should change or remove the lifetime cap, which is proposed to be applied retrospectively to past superannuation contributions.
“The lifetime non-concession contribution cap of $500,000 probably needs to be lifted or removed, or at least have a different start date, because I think that limits aspiration for people,” Mr Broad said.
“Most of us will never get $500,000 in superannuation in our lifetime, but it’s not a bad thing to lift and I like to have aspiration.
“It appears to me to be a cap on aspiration, so obviously there will need to be changes.”
Mr Broad said people should be encouraged to fund their own retirement via superannuation because it saved the government money in the long term.
“I’d get rid of the $500,000 cap. It doesn’t save as much money as other changes,” he said.
Despite Mr Broad’s opposition to the lifetime non-concession cap, he said it would not affect many people in Mallee.
“If a worker earned $100,000, and that would be a high income in Wimmera and Mallee, and paid $15,000 per year in superannuation with salary sacrifice, and did that for 40 years, that’s $600,000 to super,” he said.
“We all think ‘oh, these superannuation changes’ but when you have a look at them, a person in Wimmera and Mallee on average wages should not be affected.”
The budget proposed other changes to tax on superannuation, including a retrospective $1.6 million cap on the tax-free transfer of superannuation balances into the retirement phase .
The yearly caps on low-tax contributions to superannuation are also set to be reduced by $5000.
The proposed changes have been projected to save the government $2 billion over three years.
Liberal National Party Queensland Member for Dawson George Christensen has threatened to cross the floor of parliament and vote against the government’s proposed superannuation changes.
Mr Broad said he had not had input on the policy.
“I was talking to Mr Christensen yesterday; I think he has backed away from that position a little bit,” Mr Broad said.
“I don’t defend a policy I have had no input into forming.
“The superannuation policy was delivered from on high in the budget, it wasn’t negotiated through the Coalition party room.”
Labor shadow treasurer Chris Bowen has said the opposition might support some of the superannuation changes if they are judged to be fair by an independent review.
Mr Broad said the tax-free transfer cap would not affect many retirees.
“I think the $1.6 million that you can essentially get tax-free income from is fair and reasonable,” he said.
“Most people in the Mallee haven't got $1.6 million anyway, if they have then they should pay tax on the earnings above that.”
Mr Broad said he expected the superannuation changes to be brought to a meeting of all government Members of Parliament.
“I think for it to move, whatever is going to happen to it will have to happen through the party room, and that would be an opportunity for me to have some input into it,” he said.