'Kick in the guts': Clients react to opposition's reform plans
SMSF trustees are becoming increasingly frustrated by proposals which will chip away at their superannuation savings, and are being particularly cautious about Labor's dividend imputation reform plans.
The current tax policy of the federal opposition includes plans to end of cash refunds for excess dividend imputation credits. There are exemptions in the works for pensioners at this stage.
Several elements of this policy are unnerving for SMSF clients, according to Heffron director Meg Heffron, including the general uncertainty about policy direction.
“There is no draft legislation, and we are still waiting on the outcome of the election. That can be unsettling,” Ms Heffron told SMSF Adviser at the Heffron Super Intensive training days in Sydney.
Further, Ms Heffron hit out at policies like these which capture clients who have always invested “by the book” and are forced to backtrack or re-structure when new changes are enacted without sufficient or any grandfathering arrangements.
Labor’s policy won’t even necessarily capture larger balances, as it purports to do, which is a further “kick in the guts” for well-meaning clients, she added.
“It affects most the people who are fully in pension phase, and they’re the people that don’t necessarily have massive balances,” Ms Heffron said.
“They understandably ask ‘why did I bother saving’ sometimes,” Ms Heffron said.
The SMSF and tax professions have produced several opinions and calculations which similarly indicate Labor’s plans to don’t exclusively target the wealthy.
SuperConcepts’ manager for technical services and education, Peter Burgess, previously told SMSF Adviser this measure would in fact allow wealthy investors to accumulate more in superannuation.
“Transferring some of their pension balance to the accumulation phase may allow them to use all of their franking credits. The effect will be more retained in super for longer, as they can draw down super from accumulation phase when they need it rather than being forced to take the minimum pension each year,” he said.
Ms Heffron also told SMSF Adviser that constant tinkering with LRBA rules and regulations is unfairly targeting trustees who are abiding by current day law, and working to prevent SMSF clients from using legitimate and sound leveraging strategies.
