The 2016 budget proposals have the potential to affect 15 per cent of all SMSFs if implemented, according to BGL Corporate Solutions, with the budget papers underestimating the impact of the proposals.
After conducting an analysis of the proposed budget changes based on anonymous data from 1,200 administration firms representing 60,000 SMSFs, BGL has predicted the budget changes could affect 85,000 SMSFs or 160,000 SMSF members.
Based on the data, the proposed $1.6 million pension cap, BGL said, will affect at least 15 per cent of SMSFs, which is significantly higher than the 4 per cent figure suggested in the budget.
“However, Labor’s proposal of $75,000 tax-free income for pension accounts is significantly more onerous,” said BGL.
Based on the average returns of SMSFs from 2010 to 2014, BGL said this equates to a cap of $1.1 million and will affect at least 136,000 funds or 24 per cent of all SMSFs.
BGL believes rhe proposed lifetime cap of $500,000 for non-concessional contributions will affect at least 10 per cent of SMSFs or 56,000 funds with 106,000 members at 30 September 2015.
The amount of non-concessional contributions a fund has made is still difficult to calculate, because the data has often not been available or provided to superannuation administrators, BGL said.
The SMSF software provider also said the reductions of concessional contributions to just $25,000 and the lifetime cap on non-concessional contributions will make it difficult for anyone to build a superannuation balance that will provide sufficient retirement income.
BGL Corporate Solutions chief executive Ron Lesh said he has seen a lot of anger directed at the “ridiculous impractical superannuation policies from both sides of politics”.
“Many people are disillusioned with their superannuation. They feel the proposed superannuation policies of all the major parties are simply unfair to people who have worked all their lives to build retirement savings,” said Mr Lesh.
“They are bad for SMSFs, highly retrospective and in my view bad for Australia’s future.”
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