SMSF Association chief executive Andrea Slattery said the super industry is currently seeing a “misinformed, simplistic and distorted debate about tax concessions, and the future of the superannuation system”.
Ms Slattery argued that tax concessions are integral to super and criticised the use of Treasury tax expenditure statements (TES) to provide evidence for cutting tax concessions, stating they are “failing to tell the full story to the millions of Australians who are looking to superannuation to provide dignity and security in retirement”.
“Critics often cite the TES measurement to bolster their arguments that tax concessions are fiscally unsustainable – in the [SMSF Association’s] opinion, this ignores the nature of the TES measurements of the concessions that have the following unrealistic assumptions.”
Ms Slattery referred to remarks by the Treasury’s executive director, Revenue Group, Rob Heferen at the SMSF Association conference, reported by SMSF Adviser last week that the estimates are plainly meant to be measure of the amount of money ‘potentially’ foregone.
She said it is often forgotten that the TES measurements fail to account for the current or future savings to government created by reducing people’s reliance on the age pension – “this is a key objective of the superannuation system and a key policy rationale behind the tax concessions”.
The SMSF Owners’ Alliance (SMSFOA) also welcomed the remarks made by Mr Heferen.
“With this clarification Treasury has made it possible to have a more objective and rational discussion about the purpose, effectiveness and benefits of superannuation and how Australia’s retirement savings system can be improved, without undue focus on a large but artificial number,” said the SMSFOA.
“Reported suggestions that superannuation tax concessions may not be of benefit ignores the importance of national savings for the ongoing health of the Australian economy.”
Taxpayers Australia head of superannuation Reece Agland also agreed that the argument needs to be centred on the specific purpose of superannuation which is to provide people with a retirement income.
“There becomes a point after which you’ve got sufficient [funds] for your retirement and anything above that is not really for the purpose that superannuation was intended for, so that to me is the issue – none of this ‘Oh, he’s a rich kid, he gets off lightly’ – I don’t buy into that argument,” said Mr Agland.
“I do, [however] buy into the argument that superannuation is there to provide retirement benefit so that people aren’t relying on the pension, but once they’ve reached a certain target you do have to question whether they need any more incentives.”
Income tax incentives and concessions associated with superannuation have helped encourage Australians to save for the long term for decades now. Politicians hungry for money to fund promises to their constituents are now eyeing the accumulated funds and seeking to control the way the money is invested or get access to it in other ways. For many investors, legislative risk is becoming the greatest threat to their planning. When see or hear comments from employed journalists who enjoy generous tax payer supported wages and super contributions implying that my clients are greedy and are ripping off the tax take, I cringe. As an association, the SMSFA should joint with like minded bodies such as the AFA to protect not only our clients’ interests but those of future generations of tax payers who will simply not be able to afford to support their parents.
Reading from Treasury Secretary’s speech to CEDA on Friday it is clear that super concessions for people with high balances and middle class welfare will be targetted in next budget.