The Grattan Institute believes it’s “quite likely” there will be further changes to superannuation on top of the 2016 budgetary measures over the medium term, flagging small business concessions as a key target area.
While the budget measures are an “important step” towards achieving equity and sustainability in the superannuation system, Grattan Institute chief executive John Daley told SMSF Adviser that without additional significant shake-up, the long-term cost of the system will ultimately be unsustainable.
“This is a big stride in the right direction, but I’d be very surprised if it’s the last step on the road,” Mr Daley said.
“To have such a structural hole continuously, as it were, dragging on the income tax base suggests the system is unsustainable in the long run.
“Even with these reforms, super tax breaks will still overwhelmingly flow to high-income earners. And the long-term cost will remain unsustainable. Further changes will be needed in future.”
Mr Daley believes it’s likely the superannuation caps will continue to be tightened.
“This includes the amount you can put in before tax, the amount after tax and the amount that you can pay no tax on the earnings,” he said.
Further, he suggested the significant benefits currently afforded to small business owners may come under the chopping block in the future.
“At some stage I suspect the government is going to have to look at the provisions of small businesses that essentially allow you to tip the entirety of the capital gain that you’ve made out of the small business so that you wind up never paying tax on it,” Mr Daley said.
“It’s an obvious place to go. It’s one of those things where you can understand why it’s there to encourage small business… but do we really need a provision this generous, this large, with that big a cap, to encourage people to open small businesses and maintain numbers?”
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