In comparison with past budgets, last night’s measures contained relatively little changes to superannuation, and this has been welcomed by the industry. The proposals...
> The 'Protecting Your Super' package (which has a 1 July 2019 start date) includes a ban on exit fees and a 3 per cent cap on total fees on account balances below $6,000.
> Inactive super accounts with a balance of less than $6,000 will be mandatorily sent to the ATO, which will then attempt to reunite the funds with active accounts via a data-matching project.
> People aged 65-74 with balances below $300,000 will receive a one-year exemption from the work test for voluntary contributions. The one year exemption applies to the financial year following the last year the work test was satisfied. This will allow an additional period of time for those eligible to contribute to superannuation.
For example, Mary ceases fulltime work in 2018/19 at age 66. Her total super balance is less than $300,000. Under the current rules, if Mary wanted to contribute to super in 2019/20 (and meets any other eligibility criteria) she would need to meet a work test. However under the proposed changes, Mary would be able to contribute in 2019/20 without needing to meet the work test (note her TSB is less than $300k). However this exemption will only apply in the financial year following the year that she last met the work test. If Mary wanted to contribute any time from 2020/21 she would again need to meet the work test.
> SMSFs will be allowed to have six members, up from the current limit of four. Also, SMSFs with a history of good record-keeping and compliance will move from providing an audit on an annual basis to three-yearly cycle. Eligible SMSFs will be those with a history of three consecutive years of clear audit reports and have lodged fund’s annual return on time.
> Default life insurance cover within super will switch to 'opt in' for members younger than 25, giving members the choice to accept or decline insurance cover within employee super schemes.
> Inadvertent cap breaches - employers are required to pay Superannuation Guarantee (SG) based on an individual employee’s income. For some individuals this means their concessional contribution cap is breached by the total of multiple employers’ compulsory contributions. However, it is proposed that individuals who have a total income exceeding $263,157 pa and multiple employers will have the option to elect to no longer have SG contributions paid on certain income from their employer. This overcomes the inadvertent breach of the concessional contribution cap and associated tax penalties.