{"id":131457,"date":"2023-02-24T01:37:14","date_gmt":"2023-02-24T01:37:14","guid":{"rendered":"https:\/\/fin2me.com\/?p=131457"},"modified":"2023-02-24T01:37:14","modified_gmt":"2023-02-24T01:37:14","slug":"taxpayer-funded-inheritance-who-could-be-caught-in-super-tax-clampdown","status":"publish","type":"post","link":"https:\/\/fin2me.com\/economy\/taxpayer-funded-inheritance-who-could-be-caught-in-super-tax-clampdown\/","title":{"rendered":"\u2018Taxpayer-funded inheritance\u2019: Who could be caught in super tax clampdown"},"content":{"rendered":"

The Albanese government appears intent on restricting the level of super tax breaks enjoyed disproportionately by the better off, with a cap of $3 million to $5 million likely to be set on how much can be in super and be concessionally taxed.<\/p>\n

Balances of that size are largely held in self-managed super funds (SMSF), with the great bulk of the SMSF trustees aged 60 and over.<\/p>\n

<\/p>\n

Mercer\u2019s David Knox says the super system has an inherent bias towards high-income earners.<\/span><\/p>\n

Australian Tax Office (ATO) figures show that in 2019 about 320,000 people had super balances of more than $1 million, with about 80,000 having more than $2 million. About 11,000 had more than $5 million.<\/p>\n

The median or typical balance for those aged 60 to 64 was $178,800 for men and $137,050 for women, a difference of 23.4 per cent. Those figures are from 2019, but the balances are unlikely to have risen by very much since then.<\/p>\n

Brendan Coates, the economic policy program director at the Grattan Institute, says the tax breaks unfairly benefit the wealthy \u2013 with two-thirds of the value of the concessions going to the top 20 per cent of income earners.<\/p>\n

More Australians are accumulating super balances so large that they could never hope to spend them in their lifetimes. \u201cWe do have a situation where super is quickly turning into a taxpayer-funded inheritance scheme,\u201d Coates says.<\/p>\n

Federal treasury is consulting on an objective for superannuation that the Albanese government hopes to have enshrined in law, a commitment Labor took to the last election.<\/p>\n

What is being drafted by the government for consultation is that super is for the provision of retirement income in a way that is \u201cequitable\u201d.<\/p>\n

Clarifying the objective or purpose of super in law will lay the groundwork for the government to restrict the super tax concessions flowing to wealthy Australians. The new restrictions could be included in the budget, which will likely be delivered on May 9.<\/p>\n

Figures from the 2020 Retirement Income Review showed someone in 2018-19 with $5 million in super would have received about $70,000 in tax concessions; which has likely risen to about $80,000 now. A person with $10 million in 2018-19 would have received super tax concessions worth more than $165,000.<\/p>\n

There is a cap on super balances in retirement of $1.7 million, the level up to which earnings are tax-free. It is set to rise from July 1 as it is adjusted in line with inflation, likely to $1.9 million.<\/p>\n

It means that someone who wants to save more than the cap will have to have their excess super savings in the accumulation phase, where those still working have their super, and where earnings are taxed at 15 per cent.<\/p>\n

Though not tax-free, a tax rate of 15 per cent is well below the top marginal tax rate of 45 per cent; hence the need, in the government\u2019s eyes, to restrict the tax concessions even more.<\/p>\n

Stephen Jones, the minister for financial services, has suggested a cap of $5 million, but a cap of $3 million is also being floated.<\/p>\n

The superannuation industry wants to see a cap. It argues the savings in the super tax breaks that go to the well-off could be used to pay for changes that would help to reduce the super gender gap, such as the funding of the payment of super on the Commonwealth Paid Parental Leave scheme.<\/p>\n

David Knox, a senior partner at Mercer Australia, supports a cap on tax concessions. He says it would help create more equitable outcomes, but any cap would need to have a transition period of two to three years, as \u201cyou cannot imagine people having to sell property or shares that they have in their funds overnight\u201d.<\/p>\n

Legislating the government\u2019s preferred objective for super would make it harder for super to be raided for special purposes, such as when the Morrison government allowed super fund members who had super lost their jobs or had their hours reduced to access up to $20,000 from their super in 2020.<\/p>\n

The Association of Superannuation Funds of Australia says about 1 million accounts were left with less than $1,000 and about 160,000 accounts were emptied and closed.<\/p>\n

The government\u2019s preferred objective enshrined in law would make it much more difficult to expand the First Home Super Saver scheme, which provides very limited access to first home buyers to access their super. The Coalition took a policy to the last election to expand access for first home buyers.<\/p>\n

ATO figures show that since the First Home Super Saver scheme opened almost five years ago, fewer than 30,000 people have accessed super savings worth $415 million.<\/p>\n

The Business Briefing newsletter delivers major stories, exclusive coverage and expert opinion.<\/i><\/b> Sign up to get it every weekday morning<\/i><\/b>.<\/i><\/b><\/p>\n

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The Albanese government appears intent on restricting the level of super tax breaks enjoyed disproportionately by the better off, with a cap of $3 million […]<\/p>\n","protected":false},"author":3,"featured_media":131456,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3],"tags":[],"yoast_head":"\n\u2018Taxpayer-funded inheritance\u2019: Who could be caught in super tax clampdown - Fin2me<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/fin2me.com\/economy\/taxpayer-funded-inheritance-who-could-be-caught-in-super-tax-clampdown\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"\u2018Taxpayer-funded inheritance\u2019: Who could be caught in super tax clampdown - Fin2me\" \/>\n<meta property=\"og:description\" content=\"The Albanese government appears intent on restricting the level of super tax breaks enjoyed disproportionately by the better off, with a cap of $3 million [...]\" \/>\n<meta property=\"og:url\" content=\"https:\/\/fin2me.com\/economy\/taxpayer-funded-inheritance-who-could-be-caught-in-super-tax-clampdown\/\" \/>\n<meta property=\"og:site_name\" content=\"Fin2me\" \/>\n<meta property=\"article:published_time\" content=\"2023-02-24T01:37:14+00:00\" \/>\n<meta name=\"author\" content=\"Mark\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:image\" content=\"https:\/\/fin2me.com\/wp-content\/uploads\/2023\/02\/\u2018Taxpayer-funded-inheritance-Who-could-be-caught-in-super-tax-clampdown.jpg\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Mark\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"4 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/fin2me.com\/economy\/taxpayer-funded-inheritance-who-could-be-caught-in-super-tax-clampdown\/\",\"url\":\"https:\/\/fin2me.com\/economy\/taxpayer-funded-inheritance-who-could-be-caught-in-super-tax-clampdown\/\",\"name\":\"\u2018Taxpayer-funded inheritance\u2019: Who could be caught in super tax clampdown - 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