Naz Randeria, managing director of Reliance Auditing Services, has said the proposed 30 per cent tax on super balances over $3 million and plan to tax unrealised capital gains will undermine the overall stability and structure of one of the “best superannuation systems in the world”.
Randeria has been a vocal opponent of the proposed legislative changes since they were first mooted nearly two years ago, and with the bill scheduled to go before the Senate on 4 February, she said many Australians don’t realise the true implications of the proposal.
“The changes will undermine the overall stability and structure of what is one of the best superannuation systems in the world and force more people to rely on the age pension in retirement, resulting in increased aged care spending and completely blowing out future budgets,” Randeria said.
“The government’s continued claim that the proposal will only impact around 80,000 of Australia’s wealthiest is wrong and insulting. The younger generation is essentially being told that they have no chance of ever having $3 million in their superannuation by the time they retire, so they don’t need to worry about the changes – it’s counterproductive and belittling.”
Randeria added that Treasurer Jim Chalmers was robbing the next generations of any real opportunity to save and be self-sufficient in their retirement.
Furthermore, she said with future inflation, regional disparity and the continued rise in the cost of living, by the time today’s 20-year-olds are retiring, $3 million is likely to be considered modest or potentially even insufficient.
“Common sense would dictate that we encourage today’s children to save for a rainy day so they can continue to live a comfortable lifestyle in their later years, but instead they’re going to wear the burden of their money being used to fund the federal age pension, as more people will be relying on government support in retirement instead,” she said.
“Let’s not forget, we’re living longer, which means people need to fund their retirement and age-related costs for longer to maintain quality of life with a standard of living.”
Randeria said it wasn’t just the younger generation that would be significantly disadvantaged by the changes, and warned that farmers, start-ups and ultimately all taxpayers would also be impacted.
“The National Farmers Federation has expressed serious concerns about the impact of the changes on farmers, warning families will be forced to sell farm assets and property to meet unrealised capital gain liabilities,” she said.
“Farmers will be punished for factors outside their control while politicians conveniently shift financial-planning goal posts.”
Furthermore, she said, start-ups that rely on investors and venture capital for funding, some of which may come from superannuation funds, would find it more difficult to source funding in the future.
“What kind of message does that send? That Australia is not a place for innovators and entrepreneurs, because the government will punish you for your successes with measures such as these.”
The measures would fundamentally change the superannuation system and create a disincentive to save, she continued, forcing more people to rely on the age pension in years to come – a significant cost burden for taxpayers.
She concluded that while she was supportive of the measures the government had put in place more recently such as increasing the superannuation guarantee rate and superannuation being paid on paid parental leave, she warned they would only serve to disadvantage people should these new proposed changes be passed.
“On the one hand we have changes coming into effect that boost superannuation balances, and yet at the same time the government is trying to pass legislation that will punish you for boosting your balance too much,” she said.
“It’s hypocritical, wrong, and makes absolutely no sense.”
Keating introduced superannuation in 1991 or 1992 with the primary aim of reducing pressure on the public pension system. The focused on this instead of going after multinational corporates that take more than their fair share from our shores, and some pay little to no tax. I get the population is an aging one, but taking from the taxpayer and looking after your big corporate buddies was not the solution. The wording they use is a distraction to have us believe that this is the right thing to do, instead of questioning and examining what other options exist. Super should promote long-term financial security so we have a buffer when we decide to finish working. It seems of late that any gains in super barely keep up with inflation. It is was designed to encourage private savings and investment, not government vultures deciding when to channel the money because they cannot manage an economy. Instead, we flood our shores with immigrants of which about 10-15% contribute. We don’t need another 10,000 Yoga instructors in Australia. By just about any metric, Aussies are doing it tougher at a time when we should be prospering. Each taxpayer (Qld) is on the hook for about $160K to cover state and federal debt. In a dual-income household, that $320K. Not sure about you, but I don’t have a lazy $320K sitting around. So, if not us, then who? The next generation, to the editors point. Really? That’s exactly what the did with the COVID response. Sacrificed young and healthy people for the elderly. When did that become a thing?
The tax in principle is not a problem in my view, it the horrendous way it’s being implemented.
You can’t logically explain that if you have two investment properties and they both go up then the one in the SMSF pays the tax and the one in any other trust, company or personally held is not taxed. There is no feasible explanation that is defensible.
Non indexation is just theft of the younger generations.
I disagree on many of the points made because they ignore the purpose of superannuation. To many people are using it as estate planning to retain wealth in the family and not for retirement. It ignores the huge cost to every one of the tax concessions afforded to super. Unfortunately, this government and the previous ones refuse to do a full review and fix the whole system as all the vested interests become vocal. They are intent on tinkering on the edges and making things more complex. Neither party have any long-term plans and solutions. Everything they do is short term focussed. It should also be noted that these changes do not impact the super entitlements of the politicians.
I understand where you are coming from. Its not that simple. If I have saved all my life for my retirement, I should be able to know that those funds are there for me when I can no longer work – not a honey pot for the government because they want their filthy hands on my lifes’ savings. However, in the event of my untimely death, I would naturally want my children (or whomever I have chosen) to have the remaining funds that I was unable to pass on before my death. Sure, there may be a tax penalty, but it should not be outrageous to those inheriting these funds.
TAXING PAPER PROFITS IS NOT ON. Some senators on the crossbench may disagree, unfortunately. I sincerely hope not. Australians are for fairness, and they are not for injustice. This is egregious and unjust. It is theft. Shame on you Labor, Chalmers and Treasury. And please, NO MORE LIES or stetching of the truth. Aussies see straight through this.
Great and insightful comments here. Can’t agree more