Budget super criticism valid, but misdirected
Much of the criticism of the Government's Budget changes to superannuation has been driven more by emotion than logic with the media focusing on the wrong victims, according to the director of MGI South Queensland and Executive Chairman of MGI Australasia, Grant Field.
In an analysis of the superannuation changes and their impact on the outcome of the Federal Election, Field said he believed there was a lack of understanding of the Budget super changes and who they were likely to affect.
"None of the proposed changes in super will affect your average Joe, your average parents or grandparents," he said, but conceded that there could be serious consequences for small business owners.
"Considering 99.7 per cent of actively trading businesses in Australia are classified as small to medium enterprises, these changes could affect over two million business owners, so the media hype is warranted, it's just directed at the wrong people," Field said.
He said he was most concerned about the move to limit the maximum deductible super contribution limit to $25,000 — down from $35,000 (for those over 50) and $30,000 (for those under 50).
Field said this was because it appeared to ignore business owners.
"Most business owners that I have worked with over the last 30 years invariably reinvest all their available cash back into growing their business; this is in addition to paying off their home loan and educating their children. For most people, the financial pressure of paying off mortgages and uni fees doesn't ease until well into their forties. Often, business owners don't draw a full salary so don't get the benefit of the 9.5 per cent compulsory superannuation guarantee levy," he said.
Field said it was only by the time business owners reached their 50s that they would be in a financial position to contribute significantly into super and make up for the lack of opportunity in earlier years.
"The budget papers argue that this change will affect only three per cent of super fund members, however, I believe it will impact a significant number of business owners," he said.
"After all, if the government is going to impose a $1.6m cap on the amount that can be concessionally taxed, why does it matter what the contribution limit is?"
Recommended for you
The financial services technology firm has officially launched its digital advice and education solution for superannuation funds and other industry players.
The ETF provider has flagged a number of developments as it formally enters the superannuation space through a major acquisition.
While all MySuper products successfully passed the latest performance test, trustee-directed products encountered difficulties.
Iress has appointed Insignia Financial’s former general manager of master trust and insurance products as its newest CEO of superannuation, who will take over from Paul Giles.
