Back in April 2014, Labor announced that it planned to tax superannuation earnings above $75,000 a year at 15 per cent.
At the time, Labor said that the measure would affect approximately 60,000 superannuation account holders with superannuation balances in excess of $1.5 million.
In a more recent policy document released this year, Labor confirmed that it will still be proceeding with its plans to reduce the tax concessions for Australians with superannuation balances in excess of $1.5 million.
Speaking in a recent webinar, Smarter SMSF chief executive Aaron Dunn said that when Labor originally talked about its plans for a $75,000 earnings threshold, it said that based on a 5 per cent earnings rate, this would amount to a balance of around $1.5 million.
“If the Labor government has legislative control, would they then look to make an adjustment to the balance or the amount at which the general transfer balance cap actually operates?” Mr Dunn asked.
“Would we see a reduction from $1.6 million to $1.5 million, maybe potentially even lower? When we [look] at how many other things are linked to the general transfer balance cap, we could see a flow-on effect that occurs there as well.”
Mr Dunn said that it is possible that the Labor Party could use the general transfer balance cap as a lever to implement what their superannuation reforms were.
Given that the total superannuation balance threshold is linked to the general transfer balance cap, Mr Dunn explained that if Labor was to change the general transfer balance cap amount, this could also have flow-on effects for a range of other measures.
“When we think about the total superannuation balance, it has such a profound impact across a range of measures. At $1.6 million, [members] are limited in their ability to do things such as make non-concessional contributions, [for example],” he explained.
Mr Dunn noted that Labor has said it will not be applying changes retrospectively.
“So, if you’ve used 100 per cent of your cap, then I would assume therefore that you can carry on under that guise, but again that’s something I could potentially see being impacted if the Labor government gets into power and we have a second federal budget for the year,” he said.
At least Labor’s plan is easily implemented, just allow the first $xx,xxx of earnings to be tax free, and then tax the rest. Only needs two extra lines on the tax return to implement, and it is fair for everyone. Compare that to the current TBA system…an administrative nightmare! Also, what will happen when member A’s fund makes an incredible return on an investment and doubles their tax free pension account to $3.2m, while member B’s fund is unlucky and suffers a 50% loss and subsequent pension account balance of $800k. Both these members have maxxed their TBA yet one receives 4 times the tax free income? The current TBA system is a farce, and when it proves to be inequitable it will have to be dumped anyway.
Well then lets all NOT vote labor !
May God bless all self funded retirees, super is a honey pot that all politicians want to get their hands on, may be we should just spend the money, have a good time and then get pensions from the government.
Shorten will destroy the whole concept of saving for retirement as we know it.
So why is he able to walk away with a disgustingly unfair unfunded life pension at our expense as we struggle .totally stupid
Nothing changes shorton brains shorton principle
As long as these stupid politicians also limit their pensions to $75,000 per annum this might be acceptable.
It is my understanding that to generate the pension entitlement of Bill Shorten you would need $6million in super.
Dear me, surely common sense would say leave it be but wouldn’t surprise me being led by the grub union slush fund scumbag they are.
A Labour win at the election means “Equal poverty for all all”.