Andrea Slattery
The SMSF Association welcomes the Labor Party’s latest contribution to the superannuation debate as a key step in developing an equitable and sustainable system.
The Association’s CEO/Managing Director Andrea Slattery says: “This policy announcement has an important role to play in helping achieve a bipartisan policy on superannuation that is so critical to having a retirement income system that aims to provide all Australians with a secure and dignified retirement.
“It’s worth noting that the Financial System Inquiry (FSI) recommended that all parties to the superannuation debate find common ground on the over-arching objectives of the system, and then resolve the specific details around issues such as tax concessions.
“The Association concurs with this FSI recommendation, and believes the Government’s tax discussion paper provides an excellent opportunity to set the broad policy parameters, especially as they relate to issues such as the age pension and the Low Income Superannuation Contribution (LISC) that improves outcomes for low income earners.
“The Association is developing its submission to the Government on this discussion paper, and Labor’s latest proposals will be considered as part of this process.”
Slattery says the Association is particularly pleased by Labor’s statement that it is only considering two changes to the tax system, believing this should help infuse greater confidence into the system.
The two changes proposed by Labor are a 15% concessional tax on earnings in the pension phase that exceed $75,000 and to cut from $300,000 to $250,000 the income threshold where the tax on an individual’s superannuation contributions jumps from 15% to 30%.
Slattery says the former proposal has the potential to create a number of administrative complexities and may not bring the desired fiscal benefits being suggested.
“There are issues around how will earnings from multiple superannuation accounts be aggregated and taxed, variations in super fund returns, large capital gains from the sale of ‘lumpy assets’ that may distort earnings and ‘encouraging’ people to look outside superannuation to minimise their tax obligations.
“Policy changes to improve the equity of superannuation tax concessions will create trade-offs in terms of increased complexity or reduced confidence in superannuation, and as such must always be carefully assessed and considered.
“This is why it is critical that all interested parties in superannuation to work together to achieve a broad consensus on what the key policy objectives are so that there are clearly defined guidelines when policy detail is formulated.”