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Super tax will become political football following committee report
Superannuation will no doubt become a political football ahead of the next federal election with the Senate recommending the $3 million super tax legislation proceed with no changes.
Aaron Dunn, CEO of Smarter SMSF, said he believes superannuation will become a centrepiece in the next election following the “blinkered” approach the Economics Legislative Committee took to the Treasury Laws Amendment (Better Targeted Superannuation Concessions and Other Measures) Bill 2023 [Provisions] and Superannuation (Better Targeted Superannuation Concessions) Imposition Bill 2023 [Provisions] [May 2024].
The committee’s report, handed down on Friday, made no changes to previous drafts of the proposed legislation despite evidence from a raft of disparate associations, industry bodies and individuals.
“The report is the recommendation from the Senate and in essence what the committee has said is they will be looking for it to proceed,” Dunn said.
“The question now is that as the bill was put on hold until this report was tabled and it has to be read and make its passage through both houses to receive assent, will there be sufficient time before 30 June in the parliamentary sitting calendar to have it become law to provide 12 months for people to make the changes they need off the back of it?”
Dunn said there will be ongoing problems with the bill as more unintended consequences come to light due to the very short consultation period that was allowed.
“It seems to have been pushed through with blinkers on and the government ran towards the finish line without thinking about what ongoing issues may look like,” he said.
“We have been talking about these for the past 15 months, but it seems it has fallen on deaf ears. The committee heard all the submissions but was obviously not concerned with the issues raised. It is disappointing and if it does become law it will certainly become a policy-based issue coming into the next election.”
He added that the list of people who will be impacted by the legislation will continue to grow including those on defined benefit schemes, Millennials and women.
“There will be a lot of people aggrieved by this, but it appears from this report the government is intent on seeing this through,” he said.
SMSF Association CEO Peter Burgess said his initial view is that he is disappointed that the committee did not take on any concerns raised by the association and many others.
“The report states that the committee had not done any modelling on the liquidity aspect of things,” he said.
“The Greens dissenting report is also interesting. It essentially said they support the bill but would like the cap to be lowered from $3 million to $2 million and would like to see LRBAs banned.
“We don’t agree with this. The Council of Financial Regulators handed down a report in 2022, reviewing borrowing by superannuation funds, that found that at current levels LRBAs don’t pose a systemic risk to the superannuation system. It stated there have been some changes to policy settings in recent years that have reduced the risk to these arrangements, and there is not sufficient evidence to change that.”
I'm all for increasing taxes on those with higher balances, but taxing UNREALISED gains is completely absurd and the government has lost their minds (to be fair, it's Labor so they're mindless to begin with.....).
Those commenting on the additional tax from what I've seen aren't arguing against it in it's entirety, but certain aspects such as the above.
I know they tried to rid refundable imputation credits from dividends some years back, so it wouldn't surprise me if they tried to do this again as well.
To be fair, if Labor governments in this country didn't waste tax payer money in the first place (so many instances in Victoria in the last few years) then maybe they wouldn't have to go searching for revenue elsewhere....
0- The Govt collects tax from us, then spends it on us. It is not just a bottomless pit of money, it comes from all of us as taxpayers.
Where they give away tax concessions like low tax on superannuation investments, they are sacrificing tax they would otherwise collect, had you invested personally. So tax concessions for super cost all of us.
If you look at the annual Federal Budget, you will see “superannuation tax concessions” as a cost against theoretical tax revenue if they were not given to you.
The question often comes up for Govt, how much is too much to give away? The objective is for you to be self sufficient in retirement, and not have to receive an age pension from the rest of us.
For most couples, $6M invested ($3M each) at nil tax rate or 15% is pretty good, and more than enough to be self sufficient in retirement.
Australia’s superannuation tax concessions are already very generous. In retirement. A couple can retire & invest $3.8M (2x $1.9M) with no tax at all on the investment earnings or capital gains. You can’t get that anywhere else in terms of World.
Putting a cap on those tax concessions has been contemplated or implemented by both Governments over many decades.
Labor’s message with the new tax is clear. While taxing unrealised gains is odd and annoys a lot of people, , they have deliberately made it unpalatable to try and cap how much tax concessions are given away. It’s not a bottomless pit of tax concessions.
Australia and the rest of us taxpayers simply can’t afford to give you any more.
0 - Disappointing that most accounting bodies and representation bodies raise concerns and ask for this unfair tax not to proceed. Then all input is ignored and they proceed. Why ask for input if its not listened to?1
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