An SMSF Adviser straw poll asked readers “Do you support Labor’s proposal to tax superannuation income exceeding $75,000 by 15 per cent?”
Of the 489 respondents, 16.4 per cent said yes, while an overwhelming majority of 409 respondents or 83.6 per cent said no.
Labor’s tax proposals, announced by Opposition Leader Bill Shorten late last week, have been met with mixed reactions from the superannuation industry.
Those in the SMSF sector, including those representing SMSF trustees, have voiced strong opposition to the proposals.
“Labor says it is reacting to calls for action on superannuation tax concessions for high-income earners. These calls come from predictable quarters – left wing think tanks and industry funds that don’t like SMSFs,” the SMSF Owners’ Alliance stated.
“They are usually based on a mis-reading of tax estimates which Treasury itself says contain no policy message and don’t acknowledge that the high-income earners who get most of the superannuation tax concessions actually pay an even higher proportion in income tax.”
Others, like Taxpayers Australia, who have long been calling for a reassessment of superannuation tax concessions, have welcomed debate over the sustainability of super tax breaks for the wealthy.
While tax-free retirement income is a “great facet” of the current superannuation system, Taxpayers Australia’s head of superannuation Reece Agland believes it is unsustainable in the long run.
“You look at those that don’t need the tax concession and remove it from them. This is worthy of debate,” Mr Agland said.
Mr Agland told SMSF Adviser in mid-2014 that the “excessively generous” deductions in superannuation available to the wealthy are unsustainable and need to be considered in any genuine tax reform process.
“While most of us will need superannuation to provide for our retirement, the wealthy do not. Without it they would still be able to make adequate preparations for their retirement years,” Mr Agland said.
I expect this new tax will be paid mostly by ordinary Australians (and their heirs) and very few ultra wealthy will ever pay it. Selling superannuation assets (typically held for a long time) would generally release large proportions of capital gain, even selling around $125,000 of assets could produce $75,000 in taxable income, I expect most people will do this at some point. People with ultra large balances will move their money elsewhere, maybe withdraw it and buy a more expensive family home, zero tax as it appreciates and zero capital gains tax when it’s sold. The government will get their money but from ordinary Australians, not the ultra rich.
[quote name=”Max”]If you think about it, we already have a system that limits tax concessions provided to the wealthy – it’s called the concessional caps and non-concessional caps. That is, you can only put so much money into a concessionally tax environment. Yes there are some members who have an obscene amount of money in Super, e.g. $10M balances. However, most of these members accumulated their super prior to when caps were introduced in 2006. These members will eventually leave the system. What we don’t need is another knee jerk reaction that makes administering super a lot more difficult thereby imposing additional costs on all members.[/quote]
Max, how dare you call me “Obscene ” name calling is the lowest form of intelligent discussion.
[quote name=”Russell”]All self funded retirees should leave Australia and find a better place to live and enjoy the twilight years in a tax free environment .[/quote]
Russell if you would like to give your E-Mail address I will forward you Airline Timetables.
Continuation of the lack of leadership from the majority of well off and corporates. Amazing how it is always someone elses issue to do the heavy lifting. I suspect the proposed changes will have little or no effect on super outcomings over the long term. If anything the proposed changes are on the timid side.
Please circulate!
I went to the ANU conference on income tax after 100 years. It is astonishing how little so many academics know about tax in theory or practice. Some of the papers were informed but quite a few exhibited real ignorance.
Superannuation is a whipping boy for academic communism.
All I can say is that if a quarter of the madder ideas ever neared a Parliamentary Bills List we would have thousands of clients wanting to shift assets out of the country as well as out of super funds.
All self funded retirees should leave Australia and find a better place to live and enjoy the twilight years in a tax free environment .
If you think about it, we already have a system that limits tax concessions provided to the wealthy – it’s called the concessional caps and non-concessional caps. That is, you can only put so much money into a concessionally tax environment. Yes there are some members who have an obscene amount of money in Super, e.g. $10M balances. However, most of these members accumulated their super prior to when caps were introduced in 2006. These members will eventually leave the system. What we don’t need is another knee jerk reaction that makes administering super a lot more difficult thereby imposing additional costs on all members.