Tracey Scotchbrook has said that although the “relatively inconsequential” impact on superannuation is welcomed, it is disappointing that the key issues the SMSF Association highlighted in its pre-budget submission were not addressed.
In its submission, the SMSFA recommended that the government provide social security concessions to ensure those taking advantage of the recently introduced legacy pension amnesty are not disadvantaged by claw-back assessments.
It also urged the government to address issues on the treatment of specific fund expenses as non-arm’s length expenditure and the disproportionate outcomes arising from the operation of the capital gains tax method and calculation of fund taxable income.
Further, it called on the government to simplify the total superannuation balance tests, including the operation of the non-concessional contribution caps and the distortions arising from asynchronous indexation, and to do the same with the operation of transfer balance cap indexation, removing the complexity of individual transfer balance caps.
There were a number of other concerns in regard to the small changes made to superannuation in this year’s budget.
Robert Zammit, partner at RSM, said the sweeping personal tax rate cuts could have an unexpected outcome.
“While modest tax rate cuts will certainly be welcomed by Australian workers, there could be unexpected ramifications when it comes to encouraging lower-income earners to build their retirement savings,” Zammit said.
“The gap between the taxes paid within superannuation and for low-income earners has narrowed, and with many low-income earners likely to want access to their capital today rather than locking it up for the future, this further decreases their incentive to plan for the future. With less money going into an individual’s superannuation, the more chance they won’t have adequate funds to retire.”
Devika Shivadekar, economist at RSM Australia, said while the budget offers immediate cost-of-living and cost-of-business relief, it fails to fully address Australia’s long-term economic challenges.
While not impacting near-term economic outlook materially, she said it could potentially complicate the Reserve Bank of Australia’s ability to cut interest rates.
“The challenge for the RBA lies in balancing inflation control with economic growth and while inflation is easing, the continued high spending and subsidies in the budget could make things tricky for the RBA, with an already uncertain global economic backdrop,” Shivadekar said.
Mary Delahunty, chief executive of ASFA, said while it welcomed the measures to ensure “retirement savers get the superannuation they are owed”, there was no movement on the low-income superannuation tax offset.
Delahunty said ASFA’s pre-budget submission highlighted that enhancing LISTO could make meaningful progress in closing the superannuation gender gap, with 55 per cent of the 1.2 million Australians who could benefit being women.
“In real terms, a 35-year-old earning $44,000 a year could be $49,000 better off in retirement,” she said.
“While we were disappointed not to see this change in the budget, we look forward to working with the incoming government to make sure this vitally important equity measure is delivered.”
The Super Members Council said it was noted in the budget papers that “super taxes are notoriously volatile” and the government is projecting a $9.7 billion increase in super taxes over the next five years, driven by faster usage of COVID capital losses, stronger employment and wages growth.
