Greens Treasury spokesperson Adam Bandt MP today said that a proposals to increase the government’s super lifetime cap from $500,000 to $750,000 as a concession to the government’s backbench could actually cost the Budget money, according to a previous costing conducted by the Parliamentary Budget Office (PBO).
Prior to the government releasing its super lifetime cap measure in the 2016 Budget, the Greens commissioned the PBO to examine the revenue impacts of instating super lifetime caps of $500,000, $600,000 and $800,000. The PBO found that the current annual non-concessional cap of $180,000 with its ‘bring forward’ provision acts as an effective super lifetime cap of $540,000 and that any lifetime cap higher than this amount may see more income channelled into superannuation to avoid paying personal income tax, costing the Budget revenue.
Mr Bandt warned Scott Morrison of giving even more money the very wealthy by increasing the super lifetime cap to above $500,000 just to appease the hard-right backbenchers in his party.
Lines from Mr Bandt:
“Advice from the Parliamentary Budget Offices suggests that increasing the lifetime cap could actually see the government lose revenue.”
"It beggars belief that the government could put forward a measure that could cost the Budget money and make the superannuation system less fair."
“I am concerned that the government is intent on giving even more money to the very wealthy just to appease hard-right conservative backbenchers.”
“Treasurer Scott Morrison must come clean and release any advice from Treasury about whether an increased lifetime cap would save any money at all, or in fact come at a cost to the Budget.”
“The government is looking in the wrong place for super reforms. There are billions of dollars in potential revenue available by reining in the generous concessions given to the very wealthy when they contribute to super in the first place.”
Media contact: Adam Pulford, 0429 109 054
“For retirees who have not made substantial non-concessional contributions prior to retirement, but who want to move assets into superannuation for tax purposes when they retire, the current annual cap (with bring forward) essentially acts like a lifetime cap. (After retirement, the individual will no longer make contributions as they would not meet the work test.) Thus in cases where the lifetime cap is above the annual cap, these people will be able to make greater contributions to superannuation than under current policy.
Under options 2 [$600,000] and 3 [$800,000], the additional contributions from the one off contributors would be expected to exceed the reduction in contributions from regular contributors. In these options, a net increase in superannuation funds under management would be expected, resulting in an increase in concessionally taxed superannuation earnings (and a corresponding decrease in capital income attracting personal income tax).
Under option 1, the lifetime cap is lower than the three-year bring forward, so a net decrease in superannuation funds under management would be expected, resulting in a decrease in concessionally taxed superannuation earnings (and a corresponding increase in capital income attracting personal income tax).” (Emphasis added).