Assistant Treasurer Bill Shorten has confirmed that Treasury is reviewing the controversial penalties on superannuation contributions over the Government’s strict annual limits and is looking at options to change the laws.
Shorten – who admitted earlier this year that he had been the subject of the penalties, which can be as high as 93% of the amount over the caps – said he was aware that the problem was a “hot issue”.
“I am fully alive to it and hopefully will have an answer soon,” he told the Australian Financial Review.
The penalties have become one of the biggest area of complaint for super professionals.
About 30,000 taxpayers were caught out last year breaching the annual limits, which are $25,000 for concession contributions for those under 50, and $50,000 for concessional contributions for over 50s.
Non-concession contributions caps are set at $150,000 a year and $450,000 over three years.
Many taxpayers breach the caps by mistake, or inadvertently. For example, a worker with two or more jobs may breach the cap because multiple employers are making multiple superannuation payments under the Superannuation Guarantee.
The chief executive of the National Institute of Accountants, Andrew Conway, joined the calls for swift Government action yesterday.
“Australia is facing a real concern with an estimated five million baby boomers due to retire in the next 10 years or so.
“Complex rules and the penalty excess contributions tax mean that many Australians will not be able to maximise their retirement nest egg. It is this group of Australians that are in most need of government support as they try to take advantage of the later stages of their working life by making additional contributions above the superannuation guarantee level to bolster their superannuation savings.”
Many accounting and super bodies are privately hoping the Government may have some solutions to the penalty problem in the Federal Budget in May.
Meanwhile, Bill Shorten has also announced that the Government will pay $55 million in compensation to investors of failed super fund Trio Capital.
The payments, to over 5000 investors, will be funded by a special levy on the super sector.
However, self managed super fund trustees who invested money with Trio will not receive any compensation under the scheme.
Trio had $400 million of assets frozen by the Government late last year after claims it has put investors’ money into non-existent hedge funds.
James was the editor and publisher of SmartCompany and LeadingCompany for five years. He is now the Australian Financial Review‘s companies & markets editor, and a former BRW editor.
