The SMSF Owners' Alliance (SMSFOA) has criticised claims by the Association of Superannuation Funds of Australia (ASFA) that the current tax treatment for high super balances is unequitable.
The trustee lobbyist argued that while the ASFA report points out the tax-free income stream payments for balances exceeding $2 million, it fails to note how much more tax these people pay in the first place.
“As the Treasurer has pointed out this week, 2 per cent of taxpayers pay 26 per cent of income tax -the top 20 per cent of taxpayers pay 65 per cent of income tax,” said SMSFOA.
“Fairness can’t be judged by looking at superannuation tax benefits in isolation from income and other taxes paid.”
SMSFOA criticised ASFA’s focus on the tax benefits derived from large superannuation account balances as “looking at the issue through a very narrow prism”.
“A better perspective would be gained by taking into account all taxes paid over a lifetime and all tax concessions received,” said SMSFOA.
The trustee lobbyist also said questioning whether it is fair for younger generations of taxpayers to be funding the tax concessions of older, higher net worth individuals ignores the fact that the superannuation system is much fairer in relation to the age pension.
“Superannuation is built during a person’s working life while the Age Pension is funded by taxpayers now and in the future,” said SMSFOA.
SMSF trustees, SMSFOA said, are largely achieving the objective of the superannuation system with an average account balance of $500,000.
“An average account balance of less than $30,000 in the large APRA-regulated funds, represented by ASFA, is clearly falling well short,” said SMSFOA.
“Instead of worrying about a small number of high account balances and retirement incomes, ASFA should be concerned about why most of the members of the managed funds it represents are not going to have enough superannuation to fund ASFA’s own notion of a comfortable retirement.”
People have accumulated savings through hard work, said SMSFOA, having paid their fair share of tax and more along the way, should not be penalised for their success.
“Given the Government’s intention to have an open and sensible conversation about tax so that we can have a lower, fairer and simpler tax system, stirring up envy with headline grabbing tall poppy numbers is not a constructive contribution to the debate which should be about how every Australian can be a taller poppy,” said SMSFOA.
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