The Government has released the 2013-14 Mid-year Economic and Fiscal Outlook (MYEFO), which includes, among other changes, clarification on 92 tax and superannuation measures that were announced, but not legislated, by the previous Labor Government.
The Government had clarified their position on these measures in press releases dated 6 November 2013 and 14 December 2013. Of the 92 measures that were previously announced, the Government has advised:
- 34 will proceed
- 3 will be amended
- 55 will not go ahead
Other important proposed changes in MYEFO included abolishing or changing a range of tax, super and government assistance measures linked to the Mineral Resource Rent Tax, including:
- abolishing the low income super contribution
- maintaining the super guarantee rate at 9.25% until 30 June 2016
- abolishing the Schoolkids Bonus
- reducing the small business instant asset write-off and discontinuing depreciation concessions for motor vehicles
- discontinuing the company loss carry-back
Some super and SMSF results are:
- Administrative directions and ATO penalties - This measure will give the Australian Taxation Office (ATO) more flexible and cost-effective penalty options to deal with SMSFs that breach superannuation laws
- Unlawful payments from superannuation funds – promotion of illegal early release schemes - Introduces penalties for promoting schemes designed to obtain the illegal release of superannuation benefits.
Tax on pension earnings
On 6 November 2013, the Government announced that they would not be proceeding with the tax on pension earnings announced by the former Labor Government on 5 April 2013. If implemented this measure, subject to certain transitional rules, would have taxed people’s superannuation pension earnings above $100,000 in the draw-down phase. The complexity and compliance costs associated with this measure were extreme and, according to the Government, this measure was essentially undeliverable.
Acquisition and disposal of assets from related parties
This measure was to prohibit off-market transfers of listed securities between an SMSF and a related party and would have required all other related party transactions to be supported by a valuation from a suitably qualified independent valuer.
Verification of SMSF bank accounts
This measure would have enabled retail superannuation funds to verify the existence of an SMSF bank account before rolling over existing super money to the SMSF. This was to assist with the electronic rollover of payments to an SMSF.
Rollovers to SMSFs
This measure would have made rollovers to SMSFs a ‘designated service’ under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006. This would have required retail superannuation funds to introduce additional identification checks and safeguards when rolling over funds to an SMSF.
Another important proposal that the Government intends to proceed with is the deeming of certain account based income streams commenced on or after 1 January 2015. While this proposal was not specifically mentioned in MYEFO, legislation is currently before parliament.
It is important to note that many of the announced changes (with the exception of those unlegislated proposals that the Government has elected not to proceed with) are proposed only at this stage, and may change prior to being legislated.