Issue: 330
Sent: 07-04-2009 11:51:01
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The pre-budget rumour mills whirr into action
Yes it's that time of year again ... both Federal Budget and 30 June tax planning are in full swing.
This year's Federal Budget will be handed down on 12 May.
Already the rumour mill about possible Budgetary superannuation changes are beginning to appear.
There's talk of a reduction in super tax concessions for the over 60s. Or perhaps there might be a reduction in the tax concessions for super contributions. Or even there might be an increase in the age pension assets test taper rate from the very generous $1.50 per $1,000 of assets.
These three seem to be the most popular.
A dark horse is the return of some sort of Reasonable Benefit Limit system. We've already had a defacto return to this system with the introduction of potential employment termination payments via changes to the Corporations Act.
And no one should forget Minister Sherry's review into small super funds. Will this find its way into the budgetary publications?
Of course the budget might not contain any of these. These are merely rumours.
Will it ever be any different? Probably not. These rumours are good for most players. For the politicians it allows them to float a possible change, assess its political impact and react accordingly. Federal budgets never seem quite so bad when they don't contain a particular nasty rumour floating around this time of year. For the media it gives them something to say or to write about. For some industry players it gives them a reason to lobby government or chat about possible changes with their colleagues or clients.
Of course these constant rumours do nothing for the investor's overall perception of the super industry as one where the rules change too frequently and no one has any idea how long a particular rule will last. Not a great way to build confidence.
Most importantly what should you do at a practical level? That's not for me to say. Whenever they take concessions away the change tends to be grandfathered. This is no hard and fast rule but many of us have seen this applied fairly consistently.
My suggestion therefore would be to consider the impact of the above potential changes and act accordingly.
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