Not all SMSFs back push for lifetime contribution cap

Not all SMSFs back push for lifetime contribution cap


Not all self-managed super fund groups are calling on the government to replace the annual cap on contributions to super funds with lifetime caps or rolling caps, despite reports of seven co-signing a submission to the tax white paper urging the federal government to do so.

The groups to have made the call, which does not include a specific recommendation about whether the government should favour a lifetime or rolling cap, include the Australian Chamber of Commerce and Industry, SMSF Owners’ Alliance, the Australian Shareholders’ Association, the Australian Investors’ Association, Independent Contractors Australia, the Melbourne SMSF Group, and the Self-Managed Independent Superannuation Funds Association.

The group’s submission to the tax white paper relating to contribution caps is that more people should able save adequately in super and such changes would allow those with “broken work patterns” to have more flexibility and opportunity to save.

However, Senior Manager,Technical and Policy at SMSF Association, Jordan George, who helped prepare the SMSF Association’s submission to the white paper, told SmartCompany this morning the association was not one of the signatories calling for the replacement of the annual cap.

“We haven’t proposed to go to a lifetime cap, the reason we haven’t proposed that policy is because of complexity involved with it,” he says.

“A lifetime or rolling cap of three or five years can be quite complex to administer.

He says the SMSF Association’s own submission to government had taken a “different tack”.

“We believe a cap generally should be higher, especially concessional cap and especially for people over 50, at a time in their lives where people have the most to contribute.”

But George says he can understand why other groups were getting behind a push to replace the annual cap.

“I can see why people see merits in this idea, which includes increased flexibility in years where they have more income than others,” he says.

“All of these ideas should be considered, we need to have all the ideas on the table and have a look to see what best system is moving forward.”

David McKellar, of Allied Business Accountants, told SmartCompany he did not believe lifetime caps on contributions would work for small businesses, with too much capacity for people to “rort the system”.

“The purpose of tax concessions in super is to incentive people to fund their retirements themselves, not to provide massive tax incentives to the wealthy,” he says.

However he believed a rolling cap would probably be beneficial, especially for small businesses.

 “One year might have good year with high income, second year not so good, so having rolling cap with three year rolling cap allows them to contribute a bit more in the good years,” he says.

“Introducing a three year rolling cap would be fair and quite beneficial to small business.”


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