The Self Managed Super Fund Professionals' Association of Australia (SPAA) has welcomed 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.
Commenting further, Andrea Slattery, CEO of SPAA, said that SPAA had long held the view that the proposed tax was going to be both complex and inefficient.
"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 extremely complex and inefficient to administer for all types of superannuation funds, big and small," she said.
"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."
Slattery pointed to the 2012/13 financial year as the example.
"For instance, if the tax was to apply to the 2012-13 financial year where many Australians enjoyed returns of around 15 per cent on their superannuation assets, people with around $666,000 in superannuation would have been affected by the tax," she said.
"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."
Slattery said that the decision to abandon the proposed $2000 cap on self-education expenses would also 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," she explained.
"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."
Alternatively, Slattery said that SPAA remained concerned about the Government's decision to repeal the Low Income Superannuation Contribution (LISC) 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," she said.
"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."
Originally published by SMSF Essentials.
