Commonwealth of Australia Explanatory Memoranda Commonwealth of Australia Explanatory Memoranda[Index] [Search] [Download] [Bill] [Help]
2019-2020
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
TREASURY LAWS AMENDMENT (MORE FLEXIBLE SUPERANNUATION)
BILL 2020
EXPLANATORY MEMORANDUM
(Circulated by authority of the
Assistant Minister for Superannuation, Financial Services
and Financial Technology, Senator the Hon. Jane Hume)
Table of contents
Glossary................................................................................................. 1
General outline and financial impact ...................................................... 2
Chapter 1 Bring forward non-concessional contributions
cap ............................................................................... 3
Chapter 2 Statement of Compatibility with Human Rights ............ 6
Glossary
The following abbreviations and acronyms are used throughout this
explanatory memorandum.
Abbreviation Definition
Bill Treasury Laws Amendment (More Flexible
Superannuation) Bill 2020
ITAA 1997 Income Tax Assessment Act 1997
RSA Act Retirement Savings Accounts Act 1997
RSA Regulations Retirement Savings Accounts
Regulations 1997
SIS Act Superannuation Industry (Supervision)
Act 1993
SIS Regulations Superannuation Industry (Supervision)
Regulations 1994
1
General outline and financial impact
Bring forward non-concessional contribution cap
The current non-concessional superannuation contributions cap is
$100,000. The amendments extend the bring forward rule by enabling
individuals aged 65 and 66 to make up to three years of non-concessional
superannuation contributions under the bring forward rule.
Date of effect: 1 July 2020
Proposal announced: The Bill partially implements the measure
Improving flexibility for older Australians from the 2019-20 Budget.
Financial impact: As at the 2019-20 Budget, this measure was estimated
to have the following revenue implications ($m):
2019-20 2020-21 2021-22 2022-23
0 -10 -25 -40
Human rights implications: The Bill does not raise any human rights
issue. See Statement of Compatibility with Human Rights -- Chapter 2.
Compliance cost impact: The Bill will result in a small increase in
implementation costs for individuals and superannuation funds in the
short term. There will be an overall decrease in ongoing compliance costs
for individuals and superannuation funds.
2
Chapter 1
Bring forward non-concessional
contributions cap
Outline of chapter
1.1 The amendments to the ITAA 1997 in the Bill enable
individuals aged 65 and 66 to make up to three years of non-concessional
superannuation contributions under the bring forward rule.
Context of amendments
1.2 In the 2019-20 Budget, the Australian Government announced
that Australians over 65 would have greater flexibility in making
voluntary superannuation contributions (concessional and
non-concessional) from 1 July 2020.
1.3 This initiative is implemented through three changes:
• the age at which the work test starts to apply for voluntary
concessional and non-concessional superannuation
contributions is increased from 65 to 67;
• the cut-off age for spouse contributions is increased from
70 to 75; and
• enabling individuals aged 65 and 66 to make up to three
years of non-concessional superannuation contributions
under the bring forward rule.
1.4 The Bill amends the ITAA 1997 to implement the changes to the
bring forward rule.
1.5 The Superannuation Legislation Amendment (2020 Measures
No. 1) Regulations 2020 will amend the SIS Regulations and
RSA Regulations to implement the increases in the age at which the work
test applies and the cut-off age for spouse contributions.
Summary of new law
1.6 Individuals aged under 67 can make up to three years of
non-concessional superannuation contributions under the bring forward
rule.
3
Treasury Laes Amendment (More Flexible Superannuation) Bill 2020
1.7 This change becomes law on the first 1 January, 1 April, 1 July
or 1 October to occur after the day the Act receives the Royal Assent.
Once law, it applies to non-concessional contributions made on or after
1 July 2020.
Comparison of key features of new law and current law
New law Current law
Individuals under 67 years of age Individuals under 65 years of age
may access the bring forward may access the bring forward
non-concessional contributions cap in non-concessional contributions cap in
a particular financial year. a particular financial year (paragraph
292-85(3)(c) of the ITAA 1997).
Detailed explanation of new law
1.8 The annual non-concessional contributions cap is currently set at
$100,000 per year. This cap limits the amount of contributions that can be
made each financial year (refer subsection 292-85(2) of the ITAA 1997).
1.9 Individuals may be able to "bring forward" an amount of their
annual non-concessional contributions cap equal to two or three times the
annual cap, that is, up to $300,000, as long as they meet the eligibility
criteria in subsection 292-85(3) of the ITAA 1997.
1.10 Currently, paragraph 292-85(3)(c) provides that only an
individual under 65 years of age in the financial year in which they make
the contribution may access the bring forward non-concessional
contributions cap.
1.11 The Bill amends paragraph 292-85(3)(c) so that the cut-off age
for accessing the bring forward non-concessional contributions cap is
increased from 65 to 67 years. [Schedule 1, item 1, paragraph 292-85(3)(c) of the
ITAA 1997]
1.12 This means that individuals aged 65 and 66 who were not
previously able to access the bring forward non-concessional
contributions cap due to their age may do so, starting in the 2020-21
financial year. [Schedule 1, item 2]
Application and transitional provisions
1.13 This change becomes law on the first 1 January, 1 April, 1 July
or 1 October to occur after the day the Act receives the Royal Assent.
4
Bring forward non-concessional contributions cap
Once law, it applies to non-concessional contributions made on or after
1 July 2020. [Schedule 1, item 2]
5
Chapter 2
Statement of Compatibility with Human
Rights
Prepared in accordance with Part 3 of the Human Rights
(Parliamentary Scrutiny) Act 2011
Schedule 1 - Bring forward non-concessional contributions
cap
2.1 The Bill is compatible with human rights and freedoms
recognised or declared in the international instruments listed in section 3
of the Human Rights (Parliamentary Scrutiny) Act 2011.
Overview
2.2 The Bill amends the ITAA 1997 to enable individuals aged 65
and 66 to make up to three years of non-concessional superannuation
contributions, under the bring forward rule. This means that individuals
aged 65 and 66 can make up to three times the yearly cap of $100,000 in
non-concessional superannuation contributions
2.3 These amendments extend the existing bring forward rule to
allow individuals aged 65 and 66 to make up to $300,000 of non-
concessional superannuation contributions in a single year.
Human rights implications
2.4 The Bill does not engage any of the applicable rights or
freedoms.
Conclusion
2.5 The Bill is compatible with human rights as it does not raise any
human rights issues.
6