Tag: grandfathering

Australian federal election 2016: Worst kind of victory looms for Turnbull

July 2, 2016 – 10:49PM

Michael Gordon

Political editor, The Age

Malcolm Turnbull is facing the prospect of the worst kind of win, where the Coalition is returned with the most seats, but his authority is weakened, his internal critics are emboldened and his agenda is imperilled.

Turnbull’s warning that a protest vote would produce the chaos of a hung parliament has not deterred voters around the country from acting on their disappointment in what the Coalition has delivered since 2013.

He wanted the numbers to deliver strong, stable government and banked all on his economic plan built on company tax cuts. The best he can hope for is a wafer-thin majority and a toxic Senate: a recipe for instability if ever there was one.

The industrial legislation that was the basis for this double dissolution is now so in doubt that the joint sitting of Parliament that was intended to pass it is no certainty. Also in doubt is the prospect of Turnbull’s tax-cut legislation being passed without amendment.

Expect those Liberal MPs who supported Tony Abbott and refrained from criticising Turnbull’s campaign to be less constrained now. Turnbull will be criticised for not campaigning hard enough on security and not fighting more resolutely for the budget savings that were blocked in the Senate.

All eyes will be on the former leader, who has already made plain that he would have run a very different campaign. How will he respond?

Bill Shorten, who maintained he was never interested in an honourable defeat, is poised to achieve one, having pushed Turnbull to the brink and defied those who never considered him a serious contender.

Most of the speculation pre-election was that Shorten would be the one whose position would be under threat after the count. Now, he is in a stronger position within his party than Turnbull is in his.

Back in February, senior ALP figures were contemplating the prospect of having to remove Shorten before the election, such was Turnbull’s ascendancy. Shorten’s response was to take risks by laying out an ambitious program, to communicate with more clarity and verve and to campaign like there was no tomorrow.

Now he has earned the opportunity to build on his success, with the expectation that he will lead Labor into the next campaign.

If, as seems likely, Labor wins more seats than the national swing would suggest, this will also be an endorsement of the Labor campaign, including what many considered the overblown claims of the threat posed by the Coalition to Medicare.

The big story, aside from the Labor resurgence, is the move to minor parties and independents, reflecting the disillusionment of voters with the major parties and the established institutions.

The big story within the protest vote is a rebellion against the Coalition’s superannuation changes, which many Liberal voters saw as both a breach of faith and contrary to the principle that retrospective changes should not be introduced.

While Turnbull insists the changes were not retrospective and only affected the most wealthy Australians, he can expect to face white anger from MPs at his first partyroom meeting, post-election.

When the campaign began I wrote that the political dangers for the Coalition were twofold: that those very rich Liberals whose votes had been taken for granted would either vote Labor or withdraw their financial support because they felt they had been betrayed; and that others would become more wary of voting Coalition because they saw the Coalition as more likely to meddle with super in the future.

The Institute of Public Affairs’ John Roskam was confident that Turnbull would change the policy rather than face repudiation at the ballot box.

He was wrong but, as Peta Credlin noted on Sky News, many Liberals enraged by this issue took out their anger on the ballot box. Those who could not bring themselves to vote Labor parked their votes with the minor parties and independents.

How this pans out depends on many variables, with many battles conducted within the main event, and some history being made along the way, like Labor’s Linda Burney becoming the first Aboriginal woman to be elected to the House of Representatives.

Tasmania has gone with Labor; Shorten is set for big gains in New South Wales, Victoria is unlikely to change and could yet produce a Liberal gain; Nick Xenophon’s party has made its mark in South Australia; and the picture is mixed in Queensland and unclear in Western Australia.

Shorten needed absolutely everything to go right to have any prospect of winning the 19 seats to form government in his own right. The unknown is what difference it would have made if he had not promised higher budget deficits over the forward estimates to pay for his promises on health and education.

The impact of the Andrews’ government’s appalling handling of the CFA dispute will also come under scrutiny when Labor strategists ponder what might have been.

Australian federal election 2016: Malcolm Turnbull faces superannuation backlash as postmortem begins

The Sunday Age

Michael Gordan

3 July 2016 12.46pm

Malcolm Turnbull is coming under massive pressure from within to recast the superannuation changes he took to the election amid widespread anger and despair in Liberal ranks over his election campaign.

My phone hasn’t stopped ringing this morning from people saying it serves them right.

Save Our Super campaign spokesman Jack Hammond.

“It’s now more obvious than ever that changes have to be made,” declared John Roskam, the executive director of the Institute of Public Affairs, who predicted early in the campaign that Mr Turnbull would soften the policy rather than suffer a backlash.

Mr Turnbull resisted the pressure, insisting that the changes only affected the most wealthy Australians and were not retrospective, as critics asserted.

“It was simply diabolical for the Liberal Party to be proposing higher taxes on people who save and work hard,” Mr Roskam told Fairfax Media.

A strong Liberal Party supporter, Mr Roskam said the superannuation debate had now morphed into a much bigger discussion about “why the Coalition was proposing higher taxes and more government spending” during the campaign.

“If you have two parties who are proposing higher taxes and higher spending, it’s most likely that people are going to vote for the party that genuinely believes in higher taxes and higher spending.”

Opponents of the Coalition’s superannuation changes insist they changed votes, reduced donations to the Coalition and diminished the Liberal Party turn-out at polling booths.

“Who knows how and why people voted, but it is certainly a view among many people that it had a major impact and that is attested to by the exit polling,” Mr Roskam told Fairfax Media.

“The debate on superannuation was reignited at 10 o’clock last night when I started getting texts and calls while I was sitting on the couch watching TV. It’s about the policy, it’s about the messaging, it’s about how was this allowed to happen, and now how do they fix it?”

Tasmanian Senator Eric Abetz, who lost his cabinet position when Mr Turnbull replaced Tony Abbott as prime minister, agreed, saying: “The issue of superannuation is very dear to the core base of the Liberal Party.

“To have the certainty of that being compromised did send shock waves through that sector of the community that are our core supporters.” Another MP who declined to be named said the issue “really hurt the Liberal party base”.

The spokesman for the Melbourne-based Save Our Super campaign, Jack Hammond, says he was not surprised that the Coalition suffered losses after proposing changes he maintains were unfair and penalised those who had acted in good faith.

“My phone hasn’t stopped ringing this morning from people saying it serves them right,” Mr Hammond said.

Australian election 2016: Malcolm Turnbull says Coalition can form majority despite dramatic losses

The Guardian

Sunday 3 June 2016 01:16am

Gabrielle Chan

  • Coalition loses at least 11 seats in Australian election but expects to hang on to power
  • Final result won’t be known until Tuesday
  • Conservatives criticise PM over campaign and key policies

Malcolm Turnbull’s Coalition has been pushed to the brink in a shock election result which saw the Liberal party lose at least 11 seats, with 30% of the vote still left to be counted.

At a speech given after midnight, the prime minister claimed the Liberal and National parties would form a Coalition majority government even though he had been advised the result would not become clear until at least Tuesday.

“Based on the advice I have from the party officials, we can have every confidence that we will form a Coalition majority government in the next parliament,” he said.

On a two-party-preferred basis, Labor was leading the Coalition on 50.06% to 49.94% on a two party preferred basis at time of publication.

The prime minister left supporters and talk shows waiting late into the night for his speech as it became clear there would be no definitive result. It was 12.30am when Turnbull finally appeared.

Turnbull accused the Labor party of running “some of the most systematic, well-funded lies ever peddled in Australia” in a campaign in which Labor claimed the Coalition was planning to privatise the government funded health insurance system, Medicare.

Turnbull questioned whether there would be a police investigation over the Labor campaign and he accused Labor of sending texts to voters claiming the Coalition would sell Medicare.

After a marathon eight-week campaign, the Liberal party has lost 11 seats to Labor, including Bass, Braddon, Lindsay, Lyons, Macquarie, Eden Monaro, Longman, Macarthur, Herbert, Burt and Solomon.

Labor has lost the seat of Chisholm to the Liberal party. The National’s Damien Drum took Murray from the Liberals following the retirement of Sharman Stone.

While the make up of the Senate remains unclear, Rebekha Sharkie of the independent senator Nick Xenophon’s new party has won the seat of Mayo from the former Liberal minister Jamie Briggs, who was also her former employer.

Seats too close to call at time of publication include Cowan, Capricornia, Batman, Flynn, Hindmarsh and Forde.

The result places Turnbull under extraordinary pressure from the conservative end of his party and even before he was sighted in public, conservative members of his party were flagging changes to key policies like superannuation.

A triumphant Bill Shorten arrived at the Moonee Valley racing club in Melbourne just after 11pm on Saturday, claiming Labor was back and the Liberal party had lost his mandate.

“We will not know the outcome of this election tonight,” Shorten said. “Indeed, we may not know it for some days to come. But there is one thing for sure – the Labor party is back.”

He added: “Three years after the Liberals came to power in a landslide, they have lost their mandate.”

Shorten said the result was a clear rejection of Turnbull’s “ideological agenda” and Turnbull could no longer claim he could deliver stability.

He listed the Labor “mandate”, including Medicare policy, penalty rates, National Broadband Network and Gonski education policy.

Senior Liberals were fuming at Labor’s Medicare campaign in the final two weeks of the campaign, with the treasurer, Scott Morrison, the deputy Liberal leader, Julie Bishop, and Eric Abetz all blaming the Labor campaign for the seat loss.

But they were also forced to defend the Liberal campaign and the leadership change from Tony Abbott to Turnbull in September last year. Asked whether the leadership change made a difference, Morrison said: “Look, that is a matter we will never know.”

He added: “I think it’s highly unlikely. I think the party room made its own judgment last September.”

Bishop defended the Liberal party’s strategy as a positive campaign “of integrity”.

Asked about the effect of the change of leadership, Abetz, one of Abbott’s key supporters, said: “suffice to say a change was made for better or for worse, we move on and we’ve got to ensure Malcolm Turnbull is returned as prime minister for the sake of the nation.”

But Abetz committed to take the Coalition’s superannuation plan to the party room after the election, blaming the policy for a “haemorrhage” of votes.

“The emails coming into my office were very strident in their criticism, there was the view there was retrospectivity, there was the view they had worked hard, saved hard and doorknocking was also recurring theme,” he said.

“Regrettably some wanted to punish us for that and we did fight very hard saying be careful you don’t jump out of the frying into the fire. I fear some of them may have done that and regrettably we did haemorrhage some votes in that area as well.”

Abetz said he would move in the party room to change the superannuation policy. “I for one would be advocating we reconsider some aspects of it,” he said. “Clearly it has hurt our core constituency, those people who had scrimped and saved indeed.

“I think we do need to look at it to make sure it is fair, it is targeted and we don’t scare people away from saving and looking after themselves into the future.”

The deputy prime minister, Barnaby Joyce, held off a challenge from former independent Tony Windsor, as did the National MP for Cowper, Luke Hartsuyker, from the former independent Rob Oakeshott.

The Australian Electoral Commission estimated 10 million Australians attended 7000 polling booths to vote. The electoral commissioner, Tom Rogers, apologised for unusually long waits at polling places.

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Rogers said changes to the Senate voting rules were “the most significant changes to voting in 30 years”.

“This, in combination with record nominations in some seats, appears to have resulted in voters taking greater care and more time to cast their vote,” he said.

As the result unfolded, from the first votes counted, Tasmanian seats held by Liberals showed swings towards Labor, including with Bass, Braddon and Lyons.

Morrison, on the ABC’s election panel, was visibly angry at the result – describing it as a “campaign about fright”.

“I don’t know what is more audacious, the size of the lie that has been told or the boasting on the back of it,” he said.

“We know they told the lie, they got exposed on the lie yet they continued to back it in with the phone calls and the mail and the little cards and the whispers at the booths and all of these sorts of things.

“This was the Labor party’s campaign. It wasn’t a campaign about growing the economy, it was a campaign about fright.”

Sex Party, Greens target Liberals unhappy over superannuation taxes

The Australian Financial Review

Jun 30 2016 at 6:03 PM

Minister for small business and Assistant Treasurer Kelly O’Dwyer is feeling the heat from “Save Our Super” campaigners …

by Sally Rose

A backlash among Liberal Party supporters upset about a crackdown on superannuation tax breaks could help minor parties pick up Senate votes.

A slew of longstanding Liberal Party supporters have withdrawn their fundraising efforts, and some have even quit their party membership, in protest over a controversial reductions in super tax breaks for the wealthy was unveiled by the government in May’s federal budget.

The Australian Sex Party is the latest micro-party to appeal to disaffected Liberal Party members and voters.

“We would vote against the change to introduce a lifetime limit of $500,000 for non-concessional super contributions,” the Sex Party’s lead Senate candidate for Victoria, Meredith Doig, said.

“We do not support retrospective changes to super taxes that are unfair to those who saved under the existing rules.”

The Sex Party would seek to lift the new $1.6 million limit on retirement account balances rather than block it entirely.

“It is reasonable to impose some sort of limit on the amount of super the ultra wealthy can drawn down tax free in retirement, but we would push to have than limit raised to $2 million,” Ms Doig said.

Liberal Democrat Senator David Leyonhjelm has seen a spike in supporters angry at the government’s plans to crimp super tax breaks for the wealthy.

The Liberal Democratic Party and the Jacqui Lambie Network are two parties that have campaigned hard on a promise to block the superannuation changes.

After the May budget LDP Senator David Leyonhjelm held breakfast forums in Sydney, Melbourne, and Brisbane attacking the crackdown. He said they “contributed significantly” to his party raising $700,000 for its campaign.

“Some Liberal Party members have even hosted fundraisers for us,” Senator Leyonhjelm said.

“Many traditional Liberal party supporters have told us they will vote for us in the Senate this election due to the super issue.”

Senator Lambie has stuck doggedly to a slogan of “hands off our super”, while pledging to use any power in the Senate to vote against the changes.

Assistant Treasurer Kelly O’Dwyer, who holds the traditionally blue-ribbon seat of Higgins in Victoria, is one Liberal MP who has been under intense pressure from constituents angered by the government’s unexpected super policy.

John McMurrick, a longstanding member of the Higgins 200 Club, the main fundraising network for Ms O’Dwyer, has quit and thrown his support behind protest group Save Our Super.

Mr McMurrick, who had been actively involved in fundraising for the Liberal Party for nearly 20 years, also quit his party membership after nearly 30 years “in disgust” over the budget changes. Mr McMurrick is a semi-retired businessman turned Hollywood film producer.

Save Our Super was founded by longtime Liberal voter Jack Hammond SC, a semi-retired lawyer. The network last week held a gathering at the Malvern Town Hall attended by roughly 250 local superannuants.

Mr Hammond said it was “arrogant” of the government to assume its supporters would stick by it despite the attack on high super balances and tipped a spike in protest votes in the Senate.

“Labor is no better as an alternative,” he said.

Over the weekend the Labor Party said it would take its time in considering whether or not to adopt the government’s super changes if elected.

“We will implement those measures which turn out to be workable and fair but propose alternative measures if necessary to ensure there is no detrimental impact on the budget,” Labor spokesman for superannuation Jim Chalmers said.

The Greens, which as the largest minor party stands to gain the most from protest votes, has pointedly refused to back the changes despite them being philosophically consistent with their own stated policy “to end unfair tax breaks”.

“We’ll see what the Liberals end up proposing to Parliament after the election. We won’t be at all surprised if they wilt under the campaign from the Institute of Public Affairs or internal dissent about their proposed changes to super,” Greens Treasury spokesman Senator Adam Bandt said.

Ms O’Dwyer cautioned those considering casting a protest vote that it could lead to “another disastrous alliance” between the Greens and Labor.

Letter to Scott Morrison, Malcolm Turnbull, Kelly O’Dwyer and Mathias Cormann from Maureen Burke

Concerns regarding changes to Superannuation.

  1. I am concerned that any trust in saving to fund one’s retirement has been eroded by Mr Morrison’s budget decisions. When he spoke at the recent self managed superannuation conference held in Adelaide he said, “Our opponent’s stated policy is to tax superannuation earnings in the retirement phase.  I fear that the approach of taxing in the retirement phase penalizes Australians who have put money into superannuation under the current rules – under the deal that they thought  was there.”  He went on to say, “ It may not be technical retrospectivity, the tax technicians and the superannuation technicians may say differently.  It is effective retrospectively.  But when you just look at it, that is the great risk.”

There were also at least 10 other occasions when Mr Morrison made tax  free superannuation promises between May and June 2015.  And yet, these promises were broken when he announced the proposed changes in the budget.  People need to be able to trust the superannuation system.  Life  time decisions are made at the time of the laws available.  To change those laws retrospectively  is unreasonable and unfair.  All they do is undermine trust in the government.

Past increases in superannuation used to be grandfathered and reflected the commitments that government encouraged workers to lock their savings away for many years to fund their retirement.  So basically the Turnbull-Morison government has informed those near retirement or already retired ,  tough luck, we’ve just cut the retirement living standards you saved for, so get lost.  And save for it we did,  people of my generation.

Basically the message here is that if someone has carefully responded to all the requirements to fund themselves in retirement under the laws current at the time they did so, they can NEVER AGAIN TRUST A GOVERNMENT NOT TO CHANGE THE RULES TO DISADVANTAGE RETIREMENT LIVING STANDARDS AFTER THEY HAVE RETIRED.

  1. “There is no doubt that the proposed pension transfer balance cap of $1.6m is retrospective, as the Government has said that people with pension phase balances over $1.6m will have to reduce these by 1 July 2017, either by moving the money back into an accumulation account, or by taking it out of the super system. It is this part that makes it retrospective. (Switzer Daily, Paul Rickard, 12.05.2016).
  1. The Superannuation Fact Sheet provided by the government states that “A balance of $1.6 million could purchase an annual income stream of around four times the level of the single age pension.”

This amount has been questioned by the former treasurer of the Coalition, Peter Costello in his address to Women in Banking and Finance at a meeting in Sydney on May 17. It was reported in the Australian May 19: “Past returns are no guide to future performance.  It is the most common piece of investment advice but one the government has appeared to ignore in its proposal to cap tax-free retirement balances to $1.6 million.  Scott Morrison has claimed such a sum would provide a retirement income of about four times the aged pension, or about $88,000 a year.  But the former treasurer has pointed out rightly 5.5 per cent returns are increasingly unrealistic, for the medium term at least.  The typical diversified superannuation fund actually lost 1.6 percent in the year according to Chant West.”

Even when I spoke with Jane Prentice the member for my electorate of Ryan there was confusion about being able to top up the $1.6 million if it was reduced through something like the GFC or other aspects affecting the investment.  The answer is “NO”.  Basically this means that the Coalition Government is again reducing the standard of living for those in retirement.  I find it quite unbelievable that such ill considered decisions can be inflicted on those who throughout their life times have in all probability paid the most income tax and contributed towards the country that Australia is today.

I would refer you to an article by Rowan Dean in the Courier Mail 9/6/2016 titled “Changes to super risk election loss.”  I will provide you with one quote from this article, “ Peter Costello recently pointed out that super relies above all else on consistency.”  People spend their lifetimes working, paying taxes, and supporting others – but every day they are planning their own future.  Now the Coalition has thrown out the rule book and put a Bolshevik- style limit on how much you can save and – disgracefully- backdated it a decade.  Such betrayal from a so called “Liberal” government is beyond belief.”

  1. The number of people affected by the changes to superannuation is more than 1% as outlined in the superannuation reforms paper. There are about 110,000 people affected by the $1.6m cap, 550,000 individuals affected by the new lifetime non-concessional cap, about 640,000 individuals affected by the transition to retirement changes,.  In summary this is about 9% of fund members affected., The Australian, May 14-15.
  1. If Mr Costello had left the old reasonable limit benefit in place, its present value would be $2.5m. But the group think came to the conclusion that $1.6m is effectively the same as Labour’s  policy, which tells us that the changes were all about politics and not good policy.  Judith Sloan puts the whole thing down to a group think stuff-up.  Fearing that the government was vulnerable to accusations of being unfair the group decided it could outflank Labour on superannuation and political accolades would surely follow.  Sloan states that “the end result is an over-engineered dog’s breakfast, much of which will never be implemented, that BETRAYS A CORE CONSTITUENCY OF ITS VOTER BASE..”  SHE ALSO SAYS THAT YOUNGER PEOPLE IN THEIR 40S AND 50S WILL NEVER BE ABLE TO FUND THEMSELVES IN RETIREMENT due to the changes.
  1. The following headlines in The Australian May 21-22 cannot be ignored:

Superannuation measures are a white hot issue in conservative ranks, Dennis Shanahan, p21.

Relegate Libs to save super, Dennis Shanahan, p9.

Super Squeeze to hit an entire generation hard, Andrew White, p27, 33.

Surely there must be some recognition that changes are needed to make the overall policy acceptable and incur trust in this government.  These changes should include grandfathering appropriate aspects for those who made decisions to self fund their retirement under the rules as they existed then.  Consideration should also be given to the potential millions of people in the future who can only contribute a maximum of $25,000 pa as a Concessional contribution combined with the $500,000 lifetime Non Concessional cap.  I Ieave you to ascertain what this means for those attempting to reach the $1.6m cap.

The recent result of the Brexit campaign has thrown the financial markets into turmoil.  This will have an enormous effect on superannuation funds.  It is the uncertainty of current times and decisions upon which I, as a self funded retiree have no influence that saddens me and I am dependent upon the decision makers in government to demonstrate their concern for my wellbeing.

Maureen Burke

Brisbane, Qld

Letter to Jane Prentice (Assistant Minister for Disability Services) from Maureen Burke

Dear Jane,

Thank you for meeting with me last Thursday.  I thought I would just put the concerns I discussed with you in writing and these are outlined below:

  1. I am concerned that any trust in saving to fund one’s retirement has been eroded by Mr Morrison’s budget decisions. When he spoke at the recent self managed superannuation conference held in Adelaide he said, “Our opponent’s stated policy is to tax superannuation earnings in the retirement phase.  I fear that the approach of taxing in the retirement phase penalizes Australians who have put money into superannuation under the current rules – under the deal they thought that was there.”  He went on to say, “ It may not be technical retrospectivity, the tax technicians and the superannuation technicians may say differently.  It is effective retrospectively.  But when you just look at it, that is the great risk.”

Past increases in superannuation used to be grandfathered and reflected the commitments that government encouraged workers to lock their savings away for many years to fund their retirement.  So basically the Turnbull-Morison government has informed those near retirement or already retired ,  tough luck, we’ve just cut the retirement living standards you saved for, so get lost.

Basically the message here is that if someone has carefully responded to all the requirements to fund themselves in retirement under the laws current at the time they did so, they can NEVER AGAIN TRUST A GOVERNMENT NOT TO CHANGE THE RULES TO DISADVANTAGE RETIREMENT LIVING STANDARDS AFTER THEY HAVE RETIRED.

  1. “There is no doubt that the proposed pension transfer balance cap of $1.6m is retrospective, as the Governemnt has said that people with pension phase balances over $1.6m will have to reduce these by 1 July 2017, either by moving the money back into an accumulation account, or by taking it out of the super system. It is this part that makes it retrospective. (Switzer Daily, Paul Rickard, 12.05.2016).
  1. The Superannuation Fact Sheet you provided me with states that “A balance of $1.6 million could purchase an annual income stream of around four times the level of the single age pension.”

This amount has been questioned by the former treasurer of the Coalition, Peter Costello in his address to Women in Banking and Finance at a meeting in Sydney on May 17. It was reported in the Australian May 19: “Past returns are no guide to future performance.  It is the most common piece of investment advice but one the government has appeared to ignore in its proposal to cap tax-free retirement balances to $1.6 million.  Scott Morrison has claimed such a sum would provide a retirement income of about four times the aged pension, or about $88,000 a year.  But the former treasurer has pointed out this week, rightly 5.5 per cent returns are increasingly unrealistic, for the medium term at least.  The typical diversified superannuation fund actually lost 1.6 percent in the year according to Chant West.”

Even when I spoke with you there was confusion about being able to top up the $1.6 million if it was reduced through something like the GFC or other aspects affecting the investment.  The answer is “NO”.  Basically this means that the Coalition Government is again reducing the standard of living for those in retirement.  I find it quite unbelievable that such ill considered decisions can be inflicted on those who throughout their life times have in all probability paid the most income tax and contributed towards the country that Australia is today.

I would refer you to an article by Rowan Dean in the Courier Mail 9/6/2016 titled “Changes to super risk election loss.”  I will provide you with one quote from this article, “ Peter Costello recently pointed out that super relies above all else on consistency.”  People spend their lifetimes working, paying taxes, and supporting others – but every day they are planning their own future.  Now the Coalition has thrown out the rule book and put a Bolshevik- style limit on how much you can save and – disgracefully- backdated it a decade.  Such betrayal from a so called “Liberal” government is beyond belief.”

  1. The number of people affected by the changes to superannuation is more than 1% as outlined in the superannuation reforms paper.  There are about 110,000 people affected by the $1.6m cap, 550,000 individuals affected by the new lifetime non-concessional cap, about 640,000 individuals affected by the transition to retirement changes,.  In summary this is about 9% of fund members affected., The Australian, May 14-15.
  1. If Mr Costello had left the old reasonable limit benefit in place, its present value would be $2.5m. But the group think came to the conclusion that $1.6m is effectively the same as Labour’s  policy, which tells us that the changes were all about politics and not good policy.  Judith Sloan puts the whole thing down to a group think stuff-up.  Fearing that the government was vulnerable to accusations of being unfair the group decided it could outflank Labour on superannuation and political accolades would surely follow.  Sloan states that “the end result is an over-engineered dog’s breakfast, much of which will never be implemented, that BETRAYS A CORE CONSTITUENCY OF ITS VOTER BASE..”  SHE ALSO SAYS THAT YOUNGER PEOPLE IN THEIR 40S AND 50S WILL NEVER BE ABLE TO FUND THEMSELVES IN RETIREMENT due to the changes.
  1. The following headlines in The Australian May 21-22 cannot be ignored:

Superannuation measures are a white hot issue in conservative ranks, Dennis Shanahan, p21.

Relegate Libs to save super, Dennis Shanahan, p9.

Super Squeeze to hit an entire generation hard, Andrew White, p27, 33.

Surely there must be some recognition that changes are needed to make the overall policy acceptable and incur trust in this government.  These changes should include grandfathering appropriate aspects for those who made decisions to self fund their retirement under the rules as they existed then.  Consideration should also be given to the potential millions of people in the future who can only contribute a maximum of $25,000 pa as a Concessional contribution combined with the $500,000 lifetime Non Concessional cap.  I Ieave you to ascertain what this means for those attempting to reach the $1.6m cap.

Every Liberal voter had such high expectations of Malcolm Turnbull when he took over the leadership of the Coalition. I suggest you read the article in The SMH 16/5/2016 entitled, “Shorten turns the tables on hapless Turnbull.”  I cannot help but notice the arrogance displayed by both Malcolm Turnbull and Scott Morrison when they speak or write about the proposed changes to superannuation.  This arrogance reminds me of that displayed by the former Premier of Queensland, Campbell Newman and we all know what happened to him!

Kind regards

Maureen Burke

Brisbane, Qld

Letter from Scott Morrison to SMSFOA

auscoatofarms

 

TREASURER

Parliament House Canberra ACT 2600 Australia

Telephone: 61 2 6277 7340 | Facsimile: 61 2 6273 3420

Mr Duncan Fairweather

Executive Director
SMSF Owners’ Alliance Limited

Via email: dfairweather@smsfoa.org.au

Dear Mr Fairweather
I write to clarify the scope of the Turnbull Government’s superannuation reforms announced in the 2016-17 Budget.
As you are aware, the 2016-17 Budget announced the introduction of a lifetime non-concessional contributions cap of $500,000, applicable from 7:30pm (AEST) on 3 May 2016 (Commencement Date).

The Government has been asked to provide guidance on how this measure will apply to a very small number of individuals using sophisticated financing techniques for the purchase of assets within a self-managed superannuation fund (SMSF).

Specifically, the Government has been asked for guidance on the consequences for individuals in the following circumstances:

• The trustee of the individual’s SMSF has entered into a contract for the purchase of an asset (often using a limited recourse borrowing arrangement (LRBA)) prior to the Commencement Date (Pre-Existing Contract);

• The Pre-Existing Contract is due to be completed after the Commencement Date;

• The individual was above the lifetime non-concessional cap as of the Commencement Date or would be above the lifetime non-concessional cap as a result of further non-concessional contributions made in respect of the completion of the Pre-Existing Contract; and

• The individual had planned to complete the contract of sale by making further non-concessional contributions after the Commencement Date.

In such circumstances, transitional provisions will apply to allow further non-concessional contributions to be made only to the extent necessary to complete the Pre-Existing Contract, taking into account existing financing arrangements. The quantum of the additional contributions must also be within the constraints of the non-concessional contributions cap rules that existed immediately prior to the Commencement Date. These additional non-concessional contributions will be counted towards the lifetime non-concessional cap, but will not result in an individual being in breach of the lifetime non-concessional cap.

In addition, transitional arrangements will apply to SMSFs with existing borrowings, including LRBAs. Members of SMSFs with existing borrowings will be permitted to make further non-concessional contributions to the extent necessary to ensure the legal obligations of SMSFs that existed on or before the Commencement Date are met or to comply with the Australian Taxation Office (ATO) Practice Compliance Guideline 2016/5 (PCG 2016/5). These additional non-concessional contributions will be counted towards the lifetime non-concessional cap, but will not result in a breach of the lifetime non-concessional cap, until 31 January 2017. Once legislated, this deadline will be extended only in exceptional circumstances and at the discretion of the Commissioner of Taxation.

This transitional period allows those with no other practical option than to make further non-concessional contributions to meet legal obligations that existed at the Commencement Date or to comply with PCG 2016/5 sufficient time to rearrange their affairs such that they do not breach the cap as a result of contributions made after the Commencement Date.

The date of 31 January 2017 is consistent with the deadline set by the ATO in relation to PCG 2016/5, which provides safe harbour guidance for SMSFs who have borrowed from related parties under a LRBA.

I trust this information provides you and the very small number of individuals to whom the aforementioned proposed treatment applies the necessary certainty going forward.

Should you have any queries in relation to the contents of this letter, please do not hesitate to contact Byron Hodkinson, Senior Adviser, Office of the Treasurer on (02) 6277 7340.

Yours sincerely

The Hon Scott Morrison MP

29 June 2016

Government relents on non-concessional contributions limit for asset purchases

logosoa30 June 2016

SMSF Owners has been advised by the Treasurer that the Government will amend its policy on the back-dated $500,000 non-concessional contributions cap following concern expressed by SMSF Owners on the impact of this Budget measure on contracts that were entered into prior to the 3 May Budget.

The budget imposed a life-time $500,000 cap on non-concessional contributions from 1 July 2007.

SMSFs in the process of buying an asset, e.g. a property, and had entered a legal contract prior to the 3 May budget, expecting to use non-concessional contributions to complete the purchase, would have been caught by the new back-dated contributions cap.

The Treasurer has advised SMSF Owners that where an individual’s SMSF has entered into a contract for the purchase of an asset prior to 3 May and planned to make contributions to the SMSF to allow it to complete the purchase, this will be able to be done under transitional arrangements without breaching the $500,000 cap. However, the additional contributions must be within the $180,000 annual limit for non-concessional contributions that existed prior to the 3 May budget.

In addition, transitional arrangements will apply to SMSFs with existing borrowings to ensure legal obligations they entered into prior to 3 May can be met, but only until 31 January 2017.

The Treasurer’s letter to SMSF Owners is attached.

SMSF Owners welcomes the announcement by the Treasurer.

This decision addresses one of the concerns raised by SMSF Owners and others about the impact of the new $500,000 cap. Other concerns remain and we intend to pursue them with the Government after the election.

Contact:
Duncan Fairweather
Executive Director
SMSF Owners’ Alliance
dfairweather@smsfoa.org.au
0412 256 200
www.smsfoa.org.au

One small step for Scott Morrison…

In relation to the Government relents on non-concessional contributions limit for asset purchases post:

One small step for Scott Morrison; but, perhaps, a large step for the principle of grandfathering!!

Jack Hammond QC – Save Our Super

Labor dumps “final” super policy for increased tax grab

Labor said, more than a year ago, in their superannuation policy: “If elected, these are the final and only changes Labor will make to the tax treatment of superannuation.”

Last Sunday, just six days before the election, Labor changed its tune and revealed that it will tax superannuation more heavily if it is elected on Saturday.

Superannuation alliance group media release – 28 June 2016

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