An SMSF industry lobby group has criticised suggestions by various industry stakeholders to increase taxes on super and restrict super balances, arguing that such proposals act against the interests of super fund members.
The SMSF Owners’ Alliance (SMSFOA) was critical of some of the suggestions made in submissions to the tax discussion paper by industry associations and financial institutions, stating that these groups should not be “offering up their customers' savings by advocating new taxes”.
SMSFOA chief executive Duncan Fairweather said he disagrees with the proposal made by the Association of Superannuation Funds of Australia (ASFA) which argued individuals should “not be permitted to have total capital underlying an income stream in the pension phase in excess of $2.5 million”.
He also criticised the SMSF Association's proposal advocating a tax rate be introduced on money taken out of super above a particular income level.
“While the details of this proposal were not made clear, we believe it is the wrong approach and against the interests of SMSF owners,” said Mr Fairweather.
“The SMSF Association represents service providers to SMSFs including professional advisers who are obliged to act in the best interests of their clients.”
SMSFOA also disagrees with the proposal of the Association of Superannuation Funds of Australia (ASFA) which argued individuals should “not be permitted to have total capital underlying an income stream in the pension phase in excess of $2.5 million”.
“Apart from the practical issues inherent in such propositions, we believe they are not well motivated,” he said.
“Financial service providers should be standing up for the best interests of their clients and not be spooked by the misleading campaign being run by left-wing think tanks that the taxation of superannuation is unfair.”
Graeme Colley from the SMSF Association told SMSF Adviser that while the preferred option would be to maintain the status quo since the association does not consider the super system to be broken, it is important to be realistic and explore alternatives.
Mr Colley said the SMSF Association is looking at the introduction of an equivalent to the reasonable benefit limits system by which the concessional amount individuals can take out of super is capped at a certain level, and anything taken out above that is taxed at a higher rate.
“The system is working well although it is skewed statistically towards the upper income earners and that’s been recognised by most sectors in the community,” he said.
“Overseas models show that if you allow people to accumulate a reasonable amount during their working life and then tax it at the end, in some way then that provides a greater level of adequacy.”
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