Consumers seek reassurance over super changes

Michael Hutton

Despite the positive nature of the changes to the taxation laws governing superannuation contained in last year’s federal budget, members of the general public are still seeking confirmation that the amendments will not be reversed before they commit to strategies to take advantage of the new regime, according to the partner of a mid-tier chartered accounting firm.

“What I’m finding at the moment is after I’ve explained to clients the changes that are happening to superannuation over the next 12 months, the changes that have already happened and the changes from July 1, the reaction is often to ask me ‘Is this going to last? Has the Government really done its numbers on this?’,” HLB Mann Judd partner Michael Hutton said.

In his opinion, the changes are sustainable because the revenue the Government has raised from taxing superannuation payouts in the past were less significant and less important than the taxes levied on superannuation contributions.

Hutton said that his clients are currently being encouraged to contribute as much money into superannuation before July 1, 2007, to take advantage of the $1 million undeducted contribution limit.

Beyond July 1, he believes people’s attitude towards contributions above and beyond the compulsory superannuation guarantee levy of 9 per cent will change.

“After July 1, 2007, I expect salary sacrificing contributions into superannuation will be a much more popular strategy,” Hutton said.

“If that leaves people short of cash, then if they’re over age 55 they can then start drawing a transition to retirement pension to prop up their now depleted cashflow. And if those people are over the age of 60, then that pension income will be tax free to them,” he added.

“It’s going to be an extremely tax effective strategy for people,” Hutton said.