What's New @ Dewings?

Our approach to reviewing the Budget highlights each year has always been to focus on the impact for small-medium business owners. This year however, the way in which this Budget is received by people in business will really depend on their own outlook.

There's very little in the Budget of any consequence for business. If you're a glass half-full person, that may be a relief. For the first time in a long time, there's no changes in tax rates, the heretofore perennial undermining of retirement confidence has abated, and there are few other measures that might negatively affect business owners. If you're a glass half-empty person though, no news for business may well be bad news, with only minor assistance measures and no wider structural reform.

You can read our review here.

The Government has managed to get a modified version of its proposed cuts to the compay tax rate through the Senate. One element of the new measure will certainly be good for small to medium businesses, but the significance of the overall economic impact is a little more grey.

You can read the full details here.

The Governments re-shaped Budget superannuation proposal has successfully passed through both houses of Parliament. The result will be some of the biggest changes in superannuation since 2007.

You can read the full details here.

In breaking news last week, the Government emerged from a party room meeting to announce that it would compromise on a number of its Budget proposals for Superannuation, in an attempt to make them more palatable and secure passage through the Senate. We have taken a closer look at these compromises.

You can read the full version here.

In a recent newsletter, we discussed why we thought the sweeping changes to superannuation announced in this year's Federal Budget were bad for retirement planning. In particular, our assessment of the changes to the non-concessional contribution caps was that they were unnecessarily aggressive and retrospective. We highlighted a situation where, because the changes were to apply from Budget night, there might arise a situation where a person had entered a contract for an asset (such as property) prior to Budget night and yet was relying on non-concessional contributions made after Budget night to fulfil the contract.

We weren't alone in these concerns. Writing to the SMSF Owner's Alliance the Federal Treasurer has advised that transitional arrangements will apply to this very situation. SMSFs that were in the process of buying an asset and had entered into a contract before Budget night, but were relying on non-concessional contributions made after Budget night to complete the purchase, will be permitted to accept sufficient non-concessional contributions to fulfil the contract, even if this means that the member will exceed the new lifetime cap, provided the contributions are within the constraints of the old caps.

Transitional arrangements will also apply for SMSFs that have borrowings and rely on non-concessional contributions to fulfil the legal obligations of the borrowings, but only up until 31st January 2017.

This is welcome news, but coming almost two months after the Budget announcement, it may be too late for some account holders who were obligated to fulfil a contract in the time between Budget night and this clarification. It's this perpetual uncertainty in Superannuation, fuelled by successive Government policy changes, that is of most concern to us, as confidence in Superannuation as a retirement planning tool is increasingly undermined.