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Superannuation changes: cap may be doubled, says report

Treasurer Scott Scott Morrison talks with Tony Abbott, watched by  Malcolm Turnbull.

Treasurer Scott Scott Morrison talks with Tony Abbott, watched by Malcolm Turnbull. Getty

The Turnbull government is still grappling with its proposed superannuation changes as pressure grows within the Coalition to increase the proposed cap on after-tax contributions to $1 million.

In the latest blow to Coalition consensus over the controversial plans, former PM Tony Abbott reportedly confronted Treasurer Scott Morrison during a “tetchy” private meeting of senior Liberal and National MPs at Parliament House on Thursday.

According to The Weekend Australian newspaper, Mr Abbott argued against plans to offer super concessions to low-income earners and called for the Coalition to dump its proposed cap on post-tax contributions.

The former PM reportedly told Mr Morrison the proposed changes were “deeply unpopular” with the Coalition’s key supporters and “sent the wrong message about aspiration”.

Under the Morrison plan, the government would cap tax-free retirement accounts at $1.6 million. But anything above $1.6 million — for current or future retirees — would go into another account, with profits taxed at 15 per cent. Alternatively, the money could be withdrawn and invested elsewhere.

Mr Morrison also proposes capping non-concessional contributions, “backdating” the measure to 2007. It is this measure that has attracted the most criticism inside and outside coalition ranks.

There is currently a $180,000 a year limit on after-tax contributions, which is the extra money you put into super from your wages after paying income tax.

The government would change this to a $500,000 lifetime cap. This rule would take into account all after-tax contributions from mid-2007 onwards.

Mr Morrison unveiled the proposed changes when he delivered his first federal budget in May.

Mr Abbott reportedly argued to abandon the proposed cap on post-tax contributions.

Others within the Coalition have argued for the cap to be increased to $750,000 or $1 million. This reportedly received a “sympathetic” hearing from Mr Morrison and the Minister for Revenue, Kelly O’Dwyer, who also attended Thursday’s meeting.

Doubling the lifetime cap on non-concessional contributions to $1m would hit the budget bottom line by $750m, while increasing it to $750,000 would cost the budget $250m. Removing the retrospective elements but keeping the $500,000 cap would cost $540m.

A spokesman for Mr Morrison told the paper: “The Treasurer and Minister for Revenue and Financial Services have been consulting with colleagues on the government’s superannuation measures and welcome the continued positive discussions that have been taking place.”

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