AUSTRALIA - The A$150,000 cap on undeducted contributions proposed in the superannuation reforms can be averaged over a three-year period and will operate on a "use it or lose it basis", treasurer Peter Costello (pictured) has said.
Speaking to the investment and financial service association, Costello said after discussions with the industry, under proposed averaging arrangements it would be possible for people to contribute $450,000 over a three year period.
Any contribution made before Budget announcement will not count to the cap for the 2005 -2006 year, meaning that the $150,000 cap can be fully utilised for contributions made between 10 May and 30 June 2006.
Costello also stressed that is if one does not take the cap up in a particular year, one cannot roll that entitlement into the three year average.
He also indicated that the government has decided to allow each small business owner to contribute up to $500,000 of capital gains into a superannuation fund in addition to contributions allowed under the cap.
Consultation on the proposed reform will run till August.
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