Claims by shadow treasurer Chris Bowen that superannuation tax incentives will exceed the cost of the age pension by 2018/2019 are based on faulty estimates, according to an industry lobbyist.
The SMSF Owners' Alliance said Mr Bowen has claimed the cost of tax incentives will rise to $50 billion in justifying Labor’s proposed new tax on superannuation earnings.
SMSF Owners' Alliance executive director Duncan Fairweather said that to get the $50 million figure, Mr Bowen has “added two numbers that Treasury says should not be added together”.
Mr Fairweather said that based on a media release from the shadow minister, he has added together $20 billion in estimated superannuation contributions and $30 billion in estimated concessions on superannuation fund earnings.
“These numbers are from Treasury’s 2014 Taxation Expenditure Statement (TES) included in the Budget papers,” he said.
According to Mr Fairweather, however, it cannot be claimed by adding these two components that the total cost to the budget will be $50 billion, and this is potentially the saving that could be made if superannuation tax concessions are removed.
“They can’t be added because they measure different things. If the tax concessions on contributions are removed or reduced so less money flows into superannuation, then the earnings of superannuation funds will also be lower,” he said.
Treasury warned in the TES that these components should not be added, Mr Fairweather added.
“The shadow treasurer has not heeded this warning and so had double counted in arriving at this $50 billion number,” he said.
“Treasury has also heavily qualified the conclusions that can be drawn from the TES which attempts to measure taxes that are not collected, such as the GST exemptions on food, education and health services, the capital gains tax exemption on people’s homes and tax incentives for retirement savings.”
SUBSCRIBE TO THE SMSF ADVISER BULLETIN
- 17 Aug 2017Industry questions ATO’s capacity for new reportingBy Miranda Brownlee
- 17 Aug 2017Qld succession law changes tipped to impact SMSFsBy Miranda Brownlee
- 16 Aug 2017Contribution limits restricting future balances, warns mid-tierBy Staff Reporter
- 16 Aug 2017SMSF firms underprepared for events-based reportingBy Miranda Brownlee
- 15 Aug 2017SMSF auditor disqualified for misconductBy Staff Reporter
- 15 Aug 2017Class gains market share in financial year resultsBy Staff Reporter
- view all
- Industry questions ATO’s capacity for new reporting
With events-based reporting set to generate huge amounts of data, concerns have been raised about whether the ATO’s systems will be able t...read more
- Contribution limits restricting future balances, warns mid-tier
Clients hoping to accumulate a superannuation balance of $1.6 million by age 65 will need to start taking full advantage of concessional con...read more
- SMSF firms underprepared for events-based reporting
A straw poll has revealed that the majority of SMSF firms currently feel their firm is not equipped to deal with the proposed events-based r...read more
- view all