Government’s super tax reforms ‘modestly’ reduce tax concessions: Assistant Treasurer
Assistant Treasurer Stephen Jones has said it is a fairer outcome if the government “modestly” reduces tax concessions for superannuation accounts with “very” high balances.
In a keynote address to The Australian Financial Review’s Super and Wealth Summit, Assistant Treasurer Stephen Jones said the top 10 per cent of superannuation accounts receive over 40 per cent of the current earnings concessions.
He said in the past week the ATO revealed there were 42 SMSFs with assets over $100 million.
“No one is decrying that success, but you’ll have a hard time convincing me that these accounts need their current level of taxpayer support,” he said.
“Strengthening the [superannuation] system also means that we need to ensure it reflects society’s expectations around fairness.”
However, speaking to sister brand SMSF Adviser, Peter Burgess, SMSF Association CEO, argued that there are more than 600,000 SMSFs and the focus on ’megafunds‘ is more of a political witch hunt than a true reflection of the sector and its members.
“As we have said before, there are a number of ways the government could reduce the superannuation tax concessions for those with excessively large superannuation balances and the solution, which is currently before parliament that taxes unrealised capital gains, is not the answer.”
Super concessions to exceed age pension
On Tuesday, Minister Jones said the cost of superannuation concessions will exceed the cost of the Age Pension by the 2040s.
“We think it is a fairer outcome if we modestly reduce the tax concessions for some of these accounts with very high balances. We’re not capping how much can be held in superannuation,” he said.
“And the tax concessions will still be generous for everyone, but budgets are about trade‑offs. If you think the current tax concessions are appropriate, you will need to find those savings by cutting services somewhere else.”
The government’s superannuation policy agenda is comprehensive, he said, but it needs to be bound together by the proposed objective of superannuation.
“[The objective of superannuation is] that savings would be preserved to deliver income for a dignified retirement – alongside government support – in an equitable and sustainable way.”
“We are committed to a system where every dollar of super is paid. A system that maximises performance, and a system that puts the member’s needs at the centre. This is the vision for better retirement incomes for all Australians.”
Regarding financial advice reforms, Minister Jones said the financial advice laws in Australia are not “fit‑for‑purpose”, stating that advice is too expensive, too hard to access, and too “strangled by red tape to be helpful”.
“Treasury analysis shows around 50 per cent of [superannuation] accounts have a balance of at least $100,000 in the year before a person’s passing, but worse still if members cannot get advice from regulated sources, they may be led by ‘finfluencers’ and ‘armchair’ commentators to expose themselves to the dangerous world of scammers.”
“No one can defend the current financial advice laws when presented with these outcomes. This is an acute challenge for the superannuation industry."
He said the government has set out to implement the most significant reforms to financial advice laws in a decade and is committed to improving the retirement phase of superannuation.
“The foundation stone for this project is helping more Australians access quality and affordable financial advice. We have delivered the first tranche of reforms, and the next tranche of reforms is being drafted and prepared for introduction.”
“In this tranche of reforms, we will modernise the best interests duty and remove the safe harbour steps. We will reform statements of advice so that they are actually usable by the consumer who paid for it to make informed decisions, and we will create a new class of advisers who will be able to provide simple and safe advice.”
