A worrying election result

About the author:

Author name:

By Terri Bradford

Job title:

Head of Wealth Management

Date posted:

04 July 2016, 1:45 PM

With everything (literally) hanging in the balance as a result of the recent federal election, one unanswered question right now is what happens to the proposed superannuation reforms and, in particular, the proposed non-concessional contribution caps?

If the coalition is returned to government it will be a much-reduced party that will hope to push on with the proposed changes to superannuation. There is little doubt the $500,000 lifetime cap will have to reviewed as the Australian Labor Party (ALP) and the new Independents are unlikely to agree to this particular policy in its current form. Legislation introduced on the 3rd of May will likely be blocked. At the very least, the Coalition may have to agree to drop the idea of counting non-concessional contributions since 1 July 2007. Whatever happens, there will be changes.

All other proposed reforms may still continue. At least we have until the 1st July 2017 to find out just what will get through or not.

If the ALP is elected it is harder to predict what will become of the proposed reforms to super. Previously they had indicated support for the majority of the proposals, except for the $500,000 lifetime cap. They hinted at support for the $1.6 million pension transfer cap, but with certain provisions. They would no doubt still introduce tax on earnings over $75,000 within pension accounts. Apart from this there is little detail on exactly what else the ALP intends for superannuation.

So, what to do about your superannuation contribution plans? It's best to wait and see what happens over the next few weeks, at least until we know who will be running the country.

If you want to discuss your current superannuation arrangements, contact your Morgans adviser.

Disclaimer: The information contained in this report is provided to you by Morgans Financial Limited as general advice only, and is made without consideration of an individual's relevant personal circumstances. Morgans Financial Limited ABN 49 010 669 726, its related bodies corporate, directors and officers, employees, authorised representatives and agents ("Morgans") do not accept any liability for any loss or damage arising from or in connection with any action taken or not taken on the basis of information contained in this report, or for any errors or omissions contained within. It is recommended that any persons who wish to act upon this report consult with their Morgans investment adviser before doing so.