Pension tax overhaul splits crossbench and industry

“But this is a good example for people to focus on some of these big balance sheets that attract incredibly cheap tax rules. We need to figure out if that’s the best use of taxpayers’ money.”

Bernie Dean, CEO of Industry Super Australia.

Bernie Dean, CEO of Industry Super Australia.

The government levies a 15 percent tax on superfund earnings, a much lower rate than the income tax it would levy on the usual earnings of wealthier workers, so the main option for the government is to increase that rate to 30 percent double on amounts exceeding a certain threshold, e.g. B. $2 million or $3 million.

Industry Super Australia, which represents non-profit industry funds, said it was not opposed to a cap but had no position on where the threshold should be set.

“Any prudent government would look at Super’s tax breaks to assess their fairness and ensure they remain sustainable,” said Bernie Dean, CEO of Industry Super Australia.

But the Financial Services Council, which represents large commercial funds, has expressed concern about the government’s shift in emphasis.

“The government started the debate with a $5 million cap and has now moved to $3 million and consumers would be rightly nervous about whether the cap will affect them,” Council President Blake Briggs said.

Prime Minister Anthony Albanese insisted it was fair to have a debate on Super, despite declaring three weeks before last year’s election that “we have no intention of making Super changes”.

When asked on Ten Network on Sunday night why he said there would be no changes, Albanese said: “No, I said we had no intention, and we certainly – that’s not the aim here, but people are coming with the idea we don’t end the debate.”

Tax changes above the $2 million threshold would affect about 80,000 people, while changes above the $3 million threshold would affect just 36,000 people, according to Grattan Institute estimates, which match figures from the Association of Superannuation Funds of Australia .

The association’s latest figures revealed that men aged 60 to 64 had an average balance of $358,000, while women of the same age had $288,000.

Greens independent David Pocock and Tasmanian independents Jacqui Lambie and Tammy Tyrrell have expressed support for the idea of ​​curbing tax breaks for the very wealthy and suggested the changes could pass Parliament.

Pocock is considering the tax revenues that could be collected under the competing thresholds and urged the government to take an “evidence-based approach” to the outcome.

“This isn’t about jeopardizing people’s retirement savings, it’s about the appropriate level of tax benefit for retirement once people have millions of dollars in their super account,” he said Sunday.

“We should look for fair and reasonable ways to manage our federal budget.”

But One Nation chair Pauline Hanson has criticized the idea of ​​changing tax rates, saying: “People are fed up with governments moving the goalposts with pension plans.”

A split in the crossbench in the House of Commons has also highlighted concerns over whether the changes will go too far, with Melbourne member Goldstein Daniel warning of sudden changes.

“What the Treasurer puts out has an air of retrospective about it,” she said.

“Many members of the Goldstein community have made good faith investments in retirement savings; Many have relatively modest balances, some have large ones.

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“I’m open to discussing changes to the system if there are inappropriate loopholes, but my concern is for those in the Goldstein community who have already put their money into retirement plans based on the existing rules.”

North Sydney MP Kylea Tink expressed concern at how the government’s “kite flying” has put greater pressure on people saving for retirement and managing day-to-day pressures on the cost of living.

Tink said she’s excited about the proposal but wary of the government’s propensity to target people’s retirement savings.

Sophie Scamps, the member of Mackellar in north Sydney, said many people had made long-term investment decisions in their super but Australia needed to consider ways to fix the federal deficit.

Sharkie, who represents Mayo’s former Liberal constituency in South Australia, said she was open to the $3 million ceiling and keen to get a briefing from the Treasurer.

“I think it sounds pretty reasonable, although the devil is in the details, and I think it’s very important that the language doesn’t stop people from having more than $3 million in their Super when the tax rate changes.” . And I’m very interested in hearing from my community if they think differently.

“If you’ve got more than $3 million in your Super, you’re fine.”

Kate Chaney, the Perth-based member of Curtin, said she was not opposed to caps in principle but did not want to set a threshold for the change.

“If these changes are made, the transition would need to be handled fairly to ensure people who have planned their affairs under current regulations are not adversely affected,” she said.

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The Grattan Institute on Sunday raised concerns about the $3 million threshold, arguing that a lower cap would generate more revenue and work better over the long term as super-balances grow.

“If the government wants to establish a stake in the land, it should set it at $2 million,” Coates said.

While a retiree with a $2 million fund could earn $100,000 in annual income without paying taxes, Coates said, a young worker on a $100,000 salary would pay $23,000 in taxes.

He said the second concern is that a hard cap on the size of a superfund would be cumbersome because most of those with more than $2 million are self-managed superfunds and could have “lumpy” assets like real estate that are difficult to manage within a fund to manage were hard cap.

The Grattan Institute is advocating a change that would increase the tax on income within a fund over $2 million and allow people to have as much in their funds as they want.

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https://www.smh.com.au/politics/federal/crossbench-split-on-super-tax-overhaul-but-think-tank-wants-labor-to-go-harder-20230226-p5cnpp.html?ref=rss&utm_medium=rss&utm_source=rss_politics_federal Pension tax overhaul splits crossbench and industry

Callan Tansill

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