“We understand the budget realities the government faces, and their first budget will have a focus on funding the initiatives they took to the election in May,” said CA ANZ superannuation leader Tony Negline. 

“However, reform is vital at this time, and central to this is the NALI rules, which may have a dramatic impact on the viability of all super funds.” 

He said the NALI rules were designed to punish the egregious behaviour of those flouting compliance laws by taxing their super funds’ income and realised capital gains at a 45 per cent penalty rate. 

However, these rules were also impacting those who had made small errors in judgement and unintentional mistakes, said Mr Negline. 

“This very high tax rate could apply to compulsory Superannuation Guarantee employer contributions, which means these contributions will be taxed at 45 per cent rather than 15 per cent,” he said. 

“We have been asking the government to clarify how it plans to ensure the NALI rules remain an anti-avoidance measure and not a penalty that could apply to everyone and we hope the government makes an announcement in the budget.” 

CA ANZ also said it hoped the government would simplify the superannuation system to help reduce costs and provide better outcomes for all. 

“Australia's tax and superannuation systems are unreasonably complex and costly to administer. There are too many rules across too many pieces of legislation and regulation. Simplification will reduce costs and enable better outcomes to be delivered more efficiently,” said Mr Negline.

“Even things like clarifying and aligning the definitions of employee and contractor will make a difference. It remains inconsistent and uncertain from an income tax, superannuation, and workers’ compensation perspective.” 

“Alignment would help greatly with all Commonwealth industrial relations, tax and super laws.” 

CA ANZ also called for the government to remove the annual super cap and have it be replaced by a lifetime cap after a transition period to help support greater equality in the workforce. 

“The current annual cap penalises people who can only make larger contributions late in their working career,” said CA ANZ chief executive Ainslie van Onselen.

“It is particularly unfair on women who often take extended leave to care for children and other family members, reducing their ability to grow their super, and when they try to catch up later, they are penalised.” 

The government has already said that it would not be immediately addressing super funds and the discussion of a $5 million limit on funds in Tuesday’s budget, but instead said it would revisit it later.