Contact: John Randall
Deloitte
Partner
61-2-9322 7550

Contact: Louise Denver
Deloitte
FSI Communication Consultant
02 9322 7615

Those who had put off funding their superannuation to later may have missed the boat, Deloitte Tax and Superannuation Partner John Randall said. 

“As the proposals now stand, they seriously disadvantage those who up till now have not been able to fund at their desired levels, particularly those currently in their late 40s.”

 “While the Treasurer’s proposals for tax free benefits will be a boon for those with retirements looming, only those who have been funding at maximum levels will get the fullest advantage of the changes,” he said.

If implemented, then the level of undeducted contributions will be capped at $150,000 per year from last night (Tuesday 9 May 2006).  Any undeducted contributions made over this amount will be returned to the individual by the fund.

“The government has introduced this measure in order to eliminate the current incentive for high net worth individuals to transfer large amounts of money into the concessional superannuation regime and substantially reduce their tax liabilities,” explained Randall.

“Limits will remain on the level of deductible contributions, however there will now only be a flat deductible amount of $50,000 applicable to everyone. Contributions over the $50,000 limit will be taxed in the fund at the top marginal rate.

“For those over 50, the $50,000 cap is half what they could currently contribute on a deductible basis,” Randall explained. 

He says the Treasurer should have considered more favourable transitional provisions to ensure those within a decade of retirement age were able to get their house in order.