Scrapping tax on pension earnings exceeding $100k gets tick from SPAA
6 November 2013: The SMSF Professionals’ Association of Australia (SPAA) today welcomes the Coalition Government’s decisions to abandon the plan to tax earnings exceeding $100,000 from assets supporting self-funded pensions as well as the proposed $2000 cap on self-education expenses.
SPAA CEO Andrea Slattery says: “Since the tax on earnings exceeding $100,000 was announced, SPAA has been a strong advocate to both sides of politics that the proposed tax was going to be an extremely complex and inefficient to administer for all types of superannuation funds, big and small.
“We were also concerned that depending on the investment earnings of the fund, the proposed tax would potentially apply to many more than the estimated 16,000 funds with $2 million of assets or more that the former Government estimated it would extend to.
“For instance, if the tax was to apply to the 2012-13 financial year where many Australians enjoyed returns of around 15% on their superannuation assets, people with around $666,000 in superannuation would have been affected by the tax.
“The decision to abandon the tax will provide certainty for those saving for their retirement and those already in pension phase and relying on their superannuation to fund their retirement.”
Mrs Slattery says the decision to abandon the proposed $2000 cap on self-education expenses would ensure that professionals providing advice on SMSFs would be able to access the highest quality education.
“SPAA was critical of this policy as being short-sighted and self-defeating, arguing it would inhibit professionals, including those in financial services, maintaining and improving their knowledge to better serve their clients.
“We are a strong advocate of improving Australians’ retirement outcomes and this requires their advisers to be able to constantly increase their competencies through education, which this policy would have made more expensive for them.
“Ultimately, this proposed policy was going to have a negative effect on consumers and SPAA is happy to see it abandoned.”
She says that SPAA remains concerned with the Government’s decision to repeal the Low Income Superannuation Contribution which ensures that people earning under $37,000 a year do not pay more tax on their compulsory superannuation contributions than they do on their income.
“We will work with the Government to formulate a policy that efficiently and fairly ensures that low income earners do not face an inequitable outcome of having their compulsory superannuation contributions, which should be concessional, taxed at a rate higher than their income.
“SPAA will also work on the Government’s list of 64 announced but unlegislated tax measures to give advice on what measures should be proceeded with to improve the efficiency and integrity of the superannuation system.”
The SMSF Professionals’ Association of Australia (SPAA) is the authoritative voice for the self-managed superannuation fund (SMSF) sector. SPAA, which represents professionals providing a range of services across various disciplines in the complex area of SMSFs, is an advocate for the highest professional standards and competence to ensure SMSF trustees always receive the best possible advice.