The Institute of Public Accountants (IPA) said that in its response to the government’s Better targeted superannuation concessions discussion paper it will be focusing on individuals who have not yet met a condition of relief enabling access to their super.
“The discussion paper primarily focuses on reducing the superannuation tax concessions available to individuals whose total superannuation balances exceed $3 million,” said IPA general manager, technical policy, Tony Greco.
“Individuals who have already met a condition of release and are potentially impacted by the proposed changes have added flexibility around actions they can take to deal with this new impost.”
Mr Greco said some in this situation may choose to do nothing, while others will look at alternative structures to hold assets outside of superannuation such as trusts and companies or topping up a spouse’s or another family member’s super balance through a recontribution strategy.
“This may trigger some transactional cost such as CGT depending on which assets are disposed of so this needs to be factored into the analysis,” he said.
“This will be an individual decision based on many factors including level of savings that already exist outside of super among many of the variables at play.”
However, Mr Greco said for those who are still working and cannot access their accrued superannuation, such options may be limited if they cannot yet access their super.
“The most common conditions of release are that the member has reached their preservation age and retires, has reached their preservation age and begins a transition-to-retirement income stream, ceases an employment arrangement on or after the age of 60 or is 65 years old (even if they haven’t retired),” Mr Greco said.
“These individuals have based their decisions on the rules of the day and should be given a limited life opportunity to make withdrawals ahead of any proposed changes which are due to come into effect from 1 July 2025.
“Superannuation is a long-term investment and therefore the rules should change as infrequently as possible. Constantly moving the goalposts puts a lot of distrust in people’s mind about what future actions will follow when ad hoc changes keep been made.
“For those with short memories, it was not that long ago (2007) when the then Treasurer Peter Costello incentivised individuals to park up to a million dollars into their super account before contribution restrictions came into force.”
