EMBARGO:7.30pm Tuesday, 20 August 1996

Superannuation Reform

Tonight the Government has announced a range of measures designed to make superannuation arrangements fairer, more flexible and better suited to the needs of the modern workforce. These changes are entirely prospective and do not impact in any way on already accumulated superannuation benefits, or any benefits that might be paid under an unfunded or Constitutionally protected scheme (or 'golden handshake') with respect to service before today's announcement.

The Government will:

• Introduce a surcharge of up to 15 per cent on all future tax deductible contributions made to superannuation funds by or for high income earners, including those who salary sacrifice.
• Increase the general age limit for superannuation contributions from 65 to 70.
• Allow individuals to claim an exemption from capital gains tax on the sale of a small business where the proceeds are used for retirement.
• Allow banks, building societies, credit unions and life insurance companies to provide superannuation in the form of Retirement Savings Accounts.
• Offer an income tax rebate for people who contribute to the superannuation fund or Retirement Savings Account of a non-working or low income spouse.
• Allow employees earning between $450 and $900 per month to have the option of choosing between Superannuation Guarantee contributions or the equivalent in wages and salary.
• Abolish the superannuation standard contributions limit, so that the age based limits for deductible employer contributions will apply to all contributions for employees made by employers.
• Introduce a rebate for low income aged persons.

The Government will also review the mechanism for delivery of the 'LAW' tax cuts as matching Government contributions, as described in the 1995-96 Budget. This review will be in conjunction with a review as to the technical implementation and workability of compulsory employee contributions. The Government intends to ensure that the matching contribution is paid in an equitable and effective way, and reserves the right to deliver this assistance to superannuation or like savings.

Details of the Retirement Savings Account measures are in a separate press release; details of the other measures are in the attachment to this press release.

This press release (7 pages) is available to download in Adobe Portable Document Format (PDF) or Word6 format (click on either icon below to download);

CANBERRA 20 August 1996

20 August 1996