Speaking to SMSF Adviser, Taxpayers Australia’s superannuation products and services manager Reece Agland said a survey undertaken with Taxpayers Australia’s members showed a majority of the group’s members considered the tax benefits received by wealthier superannuants to be of concern.
“We asked members if they think there are excessive tax benefits to the wealthy and about 60 per cent said yes and about 40 per cent supported the Labor proposal to tax income over $75,000,” he said.
Mr Agland said he had been expecting a more negative response from the survey.
“We were surprised by the amount of members that were concerned about the issue of higher wealth and need to address it, because our members are largely tax practitioners, so it is interesting that there is a strong indication there that something needs to be done,” he said.
According to Mr Agland, the results were “in line with what the public would think” and indicate a “change in perception”.
“There will be those who say don’t touch it at all but I think the question is coming down to equity and whether people on high incomes [perhaps] should be contributing to government,” he said.
“I think that’s the real issue and I think people have turned it around and said, ‘well, these people are taking from the system, they’re still accessing government benefits and using the health care system and all that – they should be contributing back at least a little.”
So the proposal is that government-funded age pension payments remain tax-free to recipients, but SMSF pensions to self-funded retirees are taxed???
No matter that these “large” super balances comprise a mix of non-concessional contributions made from after-tax income, and concessional contributions that have already been subject to tax in the fund….as have fund earnings up to the point it converted to pension phase.
Government focus should be on the SPENDING side of the budget equation, rather than the TAXING side.
Stop pissing our money down the drain, and there will be plenty left for everyone!
The cost of implementation of Labours policy is the biggest weakness. Consolidating income from multiple pensions across multiple funds will be required to prevent avoidance. This will require massive resourcing at the tax office and with 1/3 money in SMSF the timing of calculating a consolidated pension earnings summary for each individual will take a up to couple of years after the end of the relevant financial year. This will create an implementation nightmare. Much smarter would be to change the taxation on pension payments and have pension payments above a certain threshold taxed at wither a flat rate of added to the pensioners taxable income and taxed at marginal rates. Those with larg balances would be forced to pay our substantial pension payments and hence pay some tax that way ia their annual tax return.
I don’t agree with a lot of the points made by Mr Agland and I suspect Labor’s policy will end up a train wreck. But it’s time we acknowledged that the current blanket non-taxation of super pension accounts is flawed and needs fixing. Of course, that’s a different point to wanting the politicians to ‘fix’ it.
People being concerned about large tax benefits to wealthier people doesn’t mean they support Labor’s policy. That logic would mean everyone concerned about climate change support the Liberals direct action policy.
I’d go further and suggest that having a percentage of the public supporting an idea doesn’t make it good policy either. There’s a percentage of the population who’ll say they support a policy idea purely because they support the party that has proposed it. We’ve all at one time had support for an idea where we just didn’t know all the facts.
From talking to some people with $2m or more in super some of them even think that some change to the concessions could be fair.
I think that side of the debate is won. The challenge is finding a good policy solution. Low cost(to super funds and Government, it collects a decent amount of tax, and has no unintended consequences for people with under say $1.5m in super.
There obviously has to be some point where it is acknowledged that the super pension tax rate is being used as a tax shelter but Mr Agland seems blissfully unaware as to how the people with big super balances got them and how much tax they paid in order to achieve that.
They almost all also have significant wealth outside super as well so ARE in fact still contributing to the system usually still significantly more than they withdraw.
Finally they are all still paying GST when they spend their pensions from their funds
The left wing propaganda that the people who have poured vastly more in to the system than they withdraw are the bludgers is both hopelessly wrong and deeply dishonest
Taxing super is unfair tighten pension assets test to ensure those that can self sustain do without any pension support
Taxing super is unfair tighten pension assets test to ensure those that can self sustain do without any pension support