As industry speculation increases over what changes may lie in wait for superannuation in the next federal Budget, shadow assistant treasurer and shadow minister for superannuation Mathias Cormann has reiterated calls for the government to resist a super tax grab.
Rice Warner Actuaries is the latest group to weigh in with its predictions on how Labor may treat super at the Budget, outlining a range of increased taxes it said were potential options for the government.
With the low income tax rebate in place and in search of an additional $1 billion in savings, an increase to the concessional contributions tax from 15 per cent to 17.5 per cent could be on the cards, Rice Warner stated.
But it said this would be a poor policy because it would lead to a different tax rate for fund earnings and on concessional contributions received, and reduce the attractiveness of super enough for some people to consider saving through alternate vehicles.
Another option the government is likely to look at is taxing contributions at a higher rate of 30 per cent for those earning more than $180,000 per year, rather than over $300,000. However, this could reduce short-term taxes and drive investments into less regulated areas, Rice Warner stated.
The government may also look at taxing fund earnings at a higher rate, taxing pension earnings and taxing lump sums, or triggering capital gains tax at the transfer from accumulation to pension, but Rice Warner also opposed each of these measures.
Rice Warner suggested a range of alternate measures, including making the extra three per cent of compulsory super up to 15 per cent an after-tax event, and reassessing the cost of the Aged Pension.
In a statement yesterday morning, Mr Cormann called for Labor to stop its attacks on Australians’ retirement savings. Then in an additional statement released with shadow treasurer Joe Hockey, Mr Cormann called for the government to rule out new superannuation tax hikes.
“Australians who are responsibly planning for their retirement need assurances that the government is not going to change the rules once again to cover up for its own financial ineptness,” the statement read.
“Julia Gillard must immediately rule out increased taxes, charges or levies on the superannuation system in the May Budget in order to plug her $120 billion great big Budget black hole.”
At the recent Conference of Major Superannuation Funds (CMSF), minister for financial services and superannuation Bill Shorten called for a bipartisan approach to restore Australian confidence in super.
However, he also outlined the role of superannuation as being for the “middle class”, pointing out it was never intended as lower class welfare, while the wealthy were originally able to use it subject to reasonable benefit limits.
This led industry commentator, Tria Investment Partners managing partner Andrew Baker, to tip some “unpleasant” changes for super at the next budget.
