Hone in on large super balances, says new report
The tax concessions afforded to high super account balances, most of which are SMSFs, should be the starting point for discussions around adjustments to the tax treatment of superannuation.
The Association of Superannuation Funds of Australia’s (ASFA’s) report on superannuation and high account balances found that there are more than 200,000 people who have superannuation account balances in excess of $1 million, with around 70,000 with balances in excess of $2.5 million.
A total of 24,000 SMSF members in the pension phase with balances in excess of $2 million received around $5.2 billion in tax-free income stream payments, the report stated, or an average of around $216,000.
This is compared with the 232,000 SMSF members with balances of less than $1 million who received a total of $8.9 billion, or an average of approximately $38,000.
"A person who retires with a very high superannuation account balance is likely to have sufficient capital to draw an income stream that will allow them to live comfortably, even if they face medical or care expenses in the future or live considerably longer than expected,” said ASFA chief executive Pauline Vamos.
“Above this level, the opportunity for people to use the concessionally-taxed super system for estate planning purposes increases.
"It is therefore appropriate to question whether or not the same tax concessions that are applied to lower balances should equally be applied to individuals with very high levels of super," Ms Vamos said.
"It also poses problems when it comes to intergenerational equity, and whether it is fair for younger generations of taxpayers to be funding the tax concessions of older high net worth individuals."