Treasurer Scott Morrison has announced that Australians with combined incomes and super contributions greater than $250,000 will pay 30 per cent tax on concessional contributions (up from 15 per cent).
The threshold for the 30 per cent concessional taxation has been lowered from the existing $300,000 level.
The annual superannuation concessional contributions cap has been lowered to $25,000, down from $30,000 for people aged below 50.
The government has also introduced a $500,000 lifetime cap for non-concessional contributions to superannuation.
“The lifetime cap will limit the extent to which the superannuation system can be used for tax minimisation and estate planning,” said the government.
The Financial Services Council (FSC) said the “proposed restrictions on savers and retirees appear to be counterproductive”.
“The test for this budget is whether Australia will have more pensioners or more self-funded retirees,” FSC chief executive Sally Loane said.
“The new caps and thresholds limit the capacity for Australians to save for their own retirement and will restrict retirees to an income of around $80,000 per annum from their superannuation.
“An $80,000 limit will fail to cover the costs of retirement for many Australians, when you include healthcare, aged care and a comfortable standard of living,” she said.
The Association of Superannuation Funds of Australia (ASFA) said it still needs to do work to understand the impact on retirement incomes.
“We do not support the reduction of annual concessional caps to $25,000. While today less than 2 per cent of people (around 255,000) with superannuation make contributions above $25,000, a significant number of such individuals that have low balances are attempting to catch up.
“For instance, around 36,000 women with balances less than $200,000 in 2013-14, were making contributions in excess of $25,000,” ASFA chief executive Pauline Vamos said.
The government has also announced a $1.6 million superannuation transfer balance cap, putting a limit on the amount of money retirees can move into the tax-free superannuation environment.
Finally, the government has unveiled a low-income superannuation tax offset to replace the low-income superannuation contribution when it expires on 30 June 2017.
“This will allow individuals with an adjusted taxable income of $37,000 or less to receive an effective refund of the tax paid on their concessional contributions, up to a cap of $500,” the government said.
