The government first announced the measure in the budget this year and released draft legislation for it in October.

In its submission, the SMSF Association said individuals should have a simple understanding of their contribution limits and the opportunities available to them.

“We believe the current combination of superannuation rules, including the proposed amendments, makes this difficult,” the submission stated.

“For example, different contribution caps relating to the non-concessional bring-forward provisions and an individual’s total superannuation balance, age restrictions, downsizer contributions, catch-up concessional contributions, and work test exempted contributions with caveats for the bring-forward rule make for very complex legislation.”

Aligning threshold with other existing ones

“The introduction of another alternative contribution total superannuation threshold at $300,000 would apply additional complexity to the superannuation system.

“For this reason, in our 2018-19 budget submission, we proposed the government should consider restoring its previous policy announced in the 2016-17 budget to repeal the superannuation work test.

“The removal of the work test would remove barriers and the red tape associated with superannuation contributions made by older workers,” it said.

“SMSF auditors and professionals find that confirming if an individual over 65 has worked 40 hours in 30 days an arduous process, creating unneeded inefficiency. Additionally, this inefficiency corresponds to a rule which is difficult for the ATO to police.”

The submission also highlighted that the introduction of yet another threshold adds further complication to the system and should instead be aligned to the total superannuation balance for catch-up contributions at $500,000.

Complications with bring-forward rule

The SMSF Association stated that the most complex aspect of the proposed legislation is the interaction of the work-test exemption with the bring-forward arrangements for non-concessional contributions for individuals between 64 and 65.

“We believe the legislation should be viewed as merely allowing an individual an extra year to access the bring-forward provisions, which are already prescribed in legislation,” it stated.

“Its affect does not specifically provide the value of three years of extra work test exempt contributions, but only an additional year of the ability to make extra contributions compared to the current system. This is because the use of the bring-forward rule is extended by one year longer.”

It also pointed out that the proposal to restrict the bring-forward rule will also require funds to record and report different sub-categories of non-concessional contributions either being non-work test exempted non-concessional contributions or work test exempted non-concessional contributions.

“If an individual meets the work test or the work test exemption, they should be able to use all the contributions available to them,” it stated.