With the federal budget due to be handed down this week, William Buck principal of superannuation Tricia Kleinig said she’d like to see an increase in the concessional contribution threshold, particularly for people aged 50 and over.
“A lot of people will have taken a fair hit to their super account values this year and some might be pulling back on salary sacrifice,” she said.
“I think there will be a lot of people in that older age bracket that might need the increase when they can afford to make contributions.”
Ms Kleinig said the removal of some of the red tape around superannuation would also be welcomed.
“Let’s simplify things so people don’t make mistakes,” she said.
“Slashing the work test and other limits to ensure people keep their money in super would also be worthwhile.”
William Buck director, wealth advisory, Adrian Frinsdorf agreed that people need to keep their money in super, as allowing access this year goes against funding for the future.
“It would be good to see some incentivisation in this budget for people to contribute more and put money back in. There will be a whole group of workers, hospitality workers particularly, that will have lost out long-term by accessing and reducing their super this year,” Mr Frinsdorf said.
William Buck expects this budget to be focused more on shorter-term economic stimulus rather than longer-term improvements to the tax system to make it more effective and efficient, with substantive reforms unlikely to occur for another three to five years.
Greg Travers, director of tax services, said this is disappointing given the tax issues widely accepted over the last few years as requiring attention haven’t disappeared because of the pandemic.
“Division 7A is an example and one that is highly relevant to SMEs, a group heavily impacted by the pandemic,” he said.
Mr Travers said Division 7A needs more attention now than it did prior to COVID-19.
“More businesses than ever will have borrowed money this year just to stay afloat. I expect there’s been loans going around everywhere and having such a complex system to deal with loans to and from companies makes it really difficult for business owners,” he said.
