Industry welcomes tax announcement
The financial services industry has broadly welcomed the Government’s move to abolish the proposed tax on superannuation earnings over $100,000.
Treasurer Joe Hockey and Assistant Treasurer Arthur Sinodinos announced yesterday that the Government would be dealing with the final backlog of 92 pieces of announced but unlegislated tax and superannuation measures by the former Labor Government.
This included the scrapping of the proposed 15 per cent tax on superannuation pension earnings over $100,000.
“The complexity and compliance costs associated with this initiative are extreme and essentially undeliverable,” Hockey and Sinodinos said in a joint statement.
The Government also announced it would not go ahead with putting a $2,000 cap on the amount people can deduct as self-education expenses.
The Financial Planning Association (FPA) chief executive Mark Rantall said the decision to halt the tax measures - which he said would have negatively impacted the superannuation system and the education and development of many professionals - was positive news for the financial planning community and beyond.
The Coalition’s announcement was also welcomed by the Association of Financial Advisers (AFA) chief, Brad Fox.
“In consultation with our adviser members and other stakeholders, it was obvious that the tax on superannuation earnings over $100,000 would likely cost more to administer than it would earn in revenue,” Fox said.
“It was always going to be problematic to enforce. The Coalition change is a positive, practical move that will help to improve stability and confidence around superannuation.”
Financial Services Council CEO John Brogden said the proposed tax was “rushed, complex and frankly, unworkable,” and that the announcement to scrap it delivered on the Government’s pre-election promise of no negative changes to superannuation.
Chief executive officer of the SMSF Professionals’ Association of Australia (SPAA) Andrea Slattery said the industry body had long been advocating against the “extremely complex” tax.
While the Association of Super Funds Australia supported the tax announcement, chief executive Pauline Vamos said there was still a conversation to be had regarding the appropriate tax policies to apply to retirees with very high account balances amounting to millions of dollars.
“The average Australian may think it unfair that all income in accounts with very high balances be tax-free throughout retirement,” Vamos said.
Additionally, she said that there needed to be further discussion around the taxation of super contributions for low-income earners, given the Government’s stated intention to remove the Low Income Super Contribution.
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