Claims that SMSFs are paying an inadequate level of tax have been insufficiently argued by critics of the SMSF sector, according to AMP SMSF.
Speaking at the 2015 SMSF Association national conference yesterday, AMP SMSF head of policy, technical and education services Peter Burgess noted the claim that SMSFs have not been paying their fair share of tax has been gaining traction in recent times.
Mr Burgess said these criticisms are usually based on the arguments that around 40 per cent of super funds are totally in the pension phase and that the “SMSF sector is obsessed with investing in high-income yielding stocks paying fully franked dividends”.
“Now if the claim here is that the SMSF sector is avoiding tax, well my view is that they’re not very good at it, because the fact that they’re receiving franking credits means they have paid some tax to start with,” he said.
“If [SMSF trustees] really wanted to minimise their tax even further, well they [could] simply invest in high-growth stocks that don’t pay dividends.”
Mr Burgess said SMSF trustees are instead making a conscious decision to invest in stocks that are paying effective dividends but also have a good track record of capital appreciation.
“Whether you agree or disagree with the franking credit regime in this country is not relevant to this discussion because SMSFs are subject to the same rules that other superannuation entities are and other tax payers are,” he said.
“I don’t believe the critics have sufficiently made their case that the SMSF sector is not paying their fair share of tax.”
Mr Burgess also stressed that APRA-regulated fund and SMSFs are subject to the same taxation system.
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