Will Budget’s super reform stoke the housing bubble?

By Leith van Onselen

Last night’s federal Budget contained a bunch of worthwhile measures that reduces the attractiveness of superannuation as a means of tax avoidance, namely:

• The $15% high income super surcharge will be lowered from $300,000 to $250,000.
• Introducing a $25,000 cap on super contributions for those aged under 50 and $35,000 for those aged over-50 (although this can be rolled-over for those with interupted work patterns).
• Capping tax-free superannuation accounts at $1.6 million, applying to both prospective and existing retirees. Additional balances over $1.6 billion will be taxed at a still concessional 15%.
• Introducing a lifetime cap of $500,000 on non-concessional superannuation contributions.
• Abandoning plans to remove the low income superannuation tax offset, which was introduced under Labor, thus ensuring that those earning less than $37,000 will not pay more tax on their super contributions than their earnings.