The federal government has ruled out introducing new measures to rebuild the superannuation balances of people who took advantage of the COVID-19-related early release provisions, claiming the current concessions are sufficient to do the task.
Following a recent address to the industry, Superannuation, Financial Services and the Digital Economy Minister Jane Hume said, in response to a question from smstrusteenews, there is no plan to change the way fund members could contribute to their super even if they had made use of the early release provisions.
This was despite a move by Pauline Hanson’s One Nation party to include an amendment to the Treasury Laws Amendment (More Flexible Superannuation) Bill 2020 that would allow super fund members to recontribute these amounts, in part or in full, in any year until 2030.
According to Hume, the early release provisions were not a new measure and already existed for those facing financial hardship, but during 2020 the government had temporarily changed what that meant and adapted the release mechanism to ensure withdrawal applications were legitimate.
“One change we made that may have flown under the radar was that we made the withdrawal tax-free, which normally, in the case of financial hardship withdrawals, aren’t tax-free, so there was a tax benefit on the way out,” she said.
“One of the things One Nation is talking about is a tax-free or tax concession on the way back in and that is already in place because the concessional cap is $25,000 per year, so if you are putting in your 9.5 per cent [superannuation guarantee contribution] and it’s less than $25,000 a year, there is already a tax concession up to that cap.
“We also have a catch-up contribution and if you have not put in the full $25,000 in previous years, you can roll those years’ concessional caps over, so there are already opportunities to put more money back into superannuation to make up the difference, taxed concessionally, and you can do it at a time that suits you.”
According to Australian Prudential Regulation Authority statistics released in January, $36.4 billion of payments have been made under the early release measures announced in mid-2020.
These payments came from 3.5 million applications in the first period of release from March to June last year, and 1.4 million applications in the second period of release from July to September, with an average payment of $7638 being received by superannuation fund members.
ATO data provided to smstrusteenews shows that up to the end of November 2020 $397 million has been released as a result of 41,000 applications from 21,000 SMSFs.
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