Technology barriers curtail Labor’s proposal, says lawyer
Labor’s proposal to increase superannuation taxes for high-income earners is unlikely to eventuate given the significant technological challenges involved in implementing the taxes, according to an industry lawyer.
Speaking at a seminar in Sydney, DBA Network director Daniel Butler said while opposition leader Bill Shorten has provided limited detail on exactly how he will implement the removal of concessions for superannuation pension income over $75,000, he is likely to encounter significant logistical challenges if his proposal is similar to the one put forward by former prime minister Julia Gillard.
“When Julia Gillard came up with her proposal [for taxes on income over] $100,000, the industry basically said to her, 'Good luck to you, this is not going to work', and that was basically the demise of the proposal,” Mr Butler said.
“If you recall, Julia Gillard didn’t want the pensioner to pay [directly].”
Mr Butler said her intention was instead that taxes on superannuation income over $100,000 be taken out by industry and retail super funds, rather than as a tax applied to personal taxable income.
“As I said before, Gillard didn’t want the pensioner paying it," he said. "They didn’t want the government embarrassed, so they tried to get it from the fund and the funds simply said they weren’t going to tune their computer system to do that. That’s often where the government flops.”
Even if such a proposal were to be implemented, superannuants would be likely to explore strategies to minimise its impact, he added.
Super members might hold more funds in the accumulation phase rather than the pension phase and determine other ways to stop cash exiting the fund, Mr Butler said.
Miranda Brownlee is the deputy editor of SMSF Adviser, which is the leading source of news, strategy and educational content for professionals working in the SMSF sector.
Since joining the team in 2014, Miranda has been responsible for breaking some of the biggest superannuation stories in Australia, and has reported extensively on technical strategy and legislative updates. Miranda has also directed SMSF Adviser's print publication for several years.
Miranda also has broad business and financial services reporting experience, having written for titles including Investor Daily, ifa and Accountants Daily.