Friday, 1 February 2013
Yesterday's Federal Treasury report on the costs of superannuation tax concessions to Australia's revenue has been seized upon by the current Federal Government as ammunition for potential further tax reform of the superannuation system.
The Prime Minister's election announcement on Wednesday this week was used as an "agenda setter" for the upcoming campaign, including a statement that "tax concessions on super for high-income earners" would again be under the spotlight.
Treasury's tax expenditures statement released yesterday estimates that tax concessions such as tax free superannuation benefits after age 60, tax on fund earnings at 15% or nil for pension paying funds and tax deductions for contributions, cost the Government upwards of $30 billion per year, estimated to reach $45 billion by 2015.
Plan to tax on super payouts greater than $1Million?
The Australian Financial Review yesterday attributed a plan to re-introduce tax on superannuation benefit payments over a $1Million threshold to a source in Superannuation Minister Bill Shorten's office late on Wednesday.
On several occasions in the last few years, both the Prime Minister and the Treasurer Wayne Swan have promised the Australian public that in relation to superannuation lump sums and income stream (pension) payments, the Government will "never remove tax-free superannuation payments for those over 60 years of age."
While this so called "$1 Million threshold" is by no means certain at this point, it will be a concern for many Australians using superannuation as their primary vehicle for saving and investing for retirement.
Hanrick Curran Partner and superannuation specialist Chris Campbell recommends that clients be cautious in acting on any Government proposals and speculation at this point.
"Drastic measures such as taking large lump sums or pension payments now, or even closing your superannuation accounts completely if retired, is not advised, given how hard it is to get savings into superannuation with limited contribution caps these days," he said.
"The leader of the Opposition, Tony Abbott, has promised 'no negative unexpected changes' around superannuation," Chris advised.
"Already we are seeing a severe backlash in the press from industry groups representing Australians who have $1.3 trillion in superannuation investment savings," he continued.
"We will be participating in this debate through our industry groups such as the Institute of Chartered Accountants, CPA Australia and SPAA, the Self Managed Superannuation Fund Professionals Association of Australia."
"One thing is for sure," he continued, "the tax concessions on superannuation are set to be an important election issue for our clients, and we will be monitoring any announcements very closely."
If you have questions please contact Chris Campbell on 07) 3218 3900 alternatively email Chris.Campbell@hanrickcurran.com.au
This Bulletin contains factual information about superannuation and tax related compliance matters and does not take into account your personal circumstances or eligibility to contribute to superannuation, to claim tax deductions or risk being assessed for excess contributions. The Corporations Act 2001 deems that making, increasing or decreasing superannuation contributions is financial advice. We are not licenced to provide financial advice. Consider seeking advice from a licensed financial adviser.