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Treasury Laws Amendment (2018 Superannuation Measures No. 1) Bill 2019 – Second Reading
Mr SUKKAR (Deakin—Assistant Treasurer and Minister for Housing) (10:22): I move:
That this bill be now read a second time.
The coalition government is introducing safeguards to ensure the integrity of the superannuation system and streamline compliance with the superannuation guarantee.
The bill introduces an employer shortfall exemption certificate for certain employees with multiple employers. Currently, employees can inadvertently breach the concessional contributions cap from compulsory contributions where they have multiple employers.
This measure will allow certain employees to avoid this outcome by applying to the Commissioner of Taxation for an exemption certificate in relation to at least one of those employers. A certificate will mean that their employer does not have to make superannuation guarantee contributions for them for up to one year. It will also mean that employees are not forced to breach their concessional cap. Instead, these employees can choose to negotiate with their employer to receive the higher remuneration.
To be eligible for a certificate, an employee must be likely to have excess concessional contributions for the financial year and have at least one other employer who is required to make superannuation guarantee contributions for them in that year. This targets the measure to those employees likely to breach the concessional cap because they have multiple employers. It also ensures that employees still receive superannuation guarantee contributions from their employment.
The bill introduces reforms to further support the operation and integrity of the Superannuation Taxation Reform Package announced in the 2016-17 budget. These measures ensure our super system is fair, sustainable and used for its core purpose. The amendments improve confidence in the system by reducing the extent of tax minimisation and estate planning in superannuation.
The amendments address the possibility of self-managed super fund members circumventing the cap on tax-free retirement phase assets through limited-recourse borrowing arrangements or non-arm’s-length expenditures.
The bill includes the outstanding value of limited-recourse borrowing arrangements in the total super balance of SMSF members who are at particular risk of entering into certain tax minimisation strategies. This measure will stop these members using LRBAs to circumvent the $1.6 million limit on non-concessional contributions.
The bill also extends the existing non-arm’s-length income rules to capture non-arm’s-length expenses. This will ensure that superannuation funds can’t circumvent the contribution caps by using non-arm’s-length expenditure to inflate their overall income—for example, by borrowing money from a member at a reduced interest rate.
Again, full details of the measures are contained in the explanatory memorandum.
Click here to access a PDF copy of the Hansard transcript of this speech