From the ABC’s soon to be defunct Fact Check Unit comes a slap in the face to lobbyists’ and Labor’s claim that the Turnbull Government’s announced superannuation caps are “retrospective” [my emphasis]:
The claim
As part of the 2016 budget, the Government announced some changes to the tax treatment of superannuation for those who have high account balances or who plan to make large after-tax contributions in the future.
Some sections of the community, and the Labor Opposition, have slammed the changes as “retrospective”, something the Government denies.
“These changes are not retrospective. Very, very clear — it is not retrospective at all,” Prime Minister Malcolm Turnbull said on May 11, 2016.
Is he correct? ABC Fact Check investigates.
The verdict
Mr Turnbull is close to the mark.
There are many different definitions of retrospectivity, ranging from a broad one that includes almost any change that affects people’s lives to a narrow one that excludes nearly every change in the law.
Given the potential for different meanings, it may be a stretch to say the changes are not retrospective “at all”.
At least one member of the Government called similar measures retrospective when in opposition.
On a broad reading, bringing in a $1.6 million cap on money transferred into a retirement phase account does retrospectively change the status of transfers previously made by those already in retirement: they will now count towards a cap, whereas they did not do so before.
But on this reading, almost every change to taxation law could be called retrospective.
On a narrower reading, the change is only prospective, given it targets only future earnings in retirement phase accounts. Prior earnings are not taxed.
Despite Labor’s protestations, its $75,000 cap on tax free income is similar, and would also be retrospective on a broad definition.
Only on the broadest possible meaning could the lifetime cap on non-concessional contributions be described as retrospective.
Those who have already exceeded the cap will not have to transfer any money out: they are, in fact, advantaged over those who have not yet reached the cap.
Ultimately, using the “retrospective” label is a convenient way for those affected to criticise the changes when the underlying objection is based on the increased tax they will have to pay.
Thank you ABC. Hopefully, this will help bury the whole “retrospective” argument, which was highly disingenuous from the get-go.
