In her first big speech of 2013, Prime Minister Julia Gillard announced she would cut the tax concession on superannuation for high-income earners, The cuts, according to excerpts from speech notes released to the media, will be ''tough and necessary'' in a new ''low-revenue environment''.
''The dependent spouse tax offset, the tax breaks for golden handshakes, tax concessions on super for high-income earners, the millionaires' dental scheme and fringe benefits loopholes for executives living away from home … all gone,” said Gillard.
Graeme Colley from the SMSF Professionals’ Association of Australia (SPAA) said they would be opposing the changes, which soured the position of Australians to have enough money to provide for their retirement.
“High income earners will go off super to other investments which provide them with much capital for their retirement…Properties and other investments, where they make an immediate tax loss and then off-set that and get capital again,” he said.
The government has asked for pre-budget submissions and Colley said he had seen many submissions that shared the same views as the SPAA.
Shadow Minister for Superannuation Mathias Cormann has also weighed-in on the debate, saying Gillard was using people's retirement savings "like an ATM to help fund Labor's wasteful spending".
"After $172 billion of accumulated deficits and another $120 billion in unfunded promises, Labor is yet again casting around for more cash and has identified Australian super savers as easy targets," Cormann said in a statement.
"Every time Labor increases taxes on Australian super savers they reduce the incentive for them to do the right thing by saving towards achieving a self-funded retirement."
During an open forum online yesterday Minister for Financial Services Bill Shorten attempted to address the concerns and answer questions of worried super holders. The questions to Shorten emphasized the growing concerns of Australians that they won’t have enough money in their super when it comes to retirement.
Jason D asked Shorten: “I'm 23 and I've been told not to expect much of a pension by the time I retire. But there has been lots of changes to super in the last couple of years. How can I know it won't be all gone or eaten by tax?”
Luke also showed the confusion hitting Australians as more changes affect their super: “Am I right that the super I pay my employees is going up this year? What will the rate be and will it keep increasing?”
Shorten reassured those who joined the online discussion that the increase in the superannuation guarantee, plus the tax exemption for those who earn less than $37,000, would ensure them enough money to retire in the future.
Shorten also predicted stronger returns for super funds this year:
Mark of Melbourne: “My Superannuation return has been in the negative for the Past 2 years. Is there a government body that can control this?”
Bill Shorten: APRA regulate superannuation funds. The good news is that for the first 6 months of this financial year super funds are returning some much needed stronger returns.
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David Mc on 31 Jan 2013 01:00 PM
Marc, it has nothing to do with their socialist doctrine. They are so ridiculously hopeless at managing funds & the economy they have to steal money from wherever they can.
They have no concept of adjusting expenditure to match income.
No concept of reducing ridiculous expenditure or cutting wastage.
They can spend billions before they realise their poor negotiating skills have failed to produce one red cent.
The country cannot afford these idiots any longer!!
John on 31 Jan 2013 03:24 PM
Did Shorten actually answer the question about potecting funds in super and how does he have access to the crystal ball that ensures all super funds will increase in next six months, and does it it give anyone any comfort relying on their super funds nearing retirement given they have lost in the past 2 years.
Jeff Mazzini- AAMC Training Group on 31 Jan 2013 03:46 PM
Tinkering with superannuation in this manner will in itself cause a lot issues in the years to come and the public system will not support. Have the leaders of this country also reduced their superannuation benefits in line with their own measures which they are continually targeting. Basically the days of Robin Hood are well and truly passed so why do some continue to fantasise in such a way that hurts the very people that are paying their very large current and future perks.
Love to be a fly on the wall in the “let's get the hard workers that provide employment” decision making rooms and feed the ones that believe in our Robin Hood story telling fables and are guidable enough to vote for us.
Peter Vickers on 01 Feb 2013 10:59 AM
How did we get one of the best super/savings systems in the world?
In the bad old days of industrial relations the unions needed to find a way to justify wage increases. They looked around and found that the bosses were members of generous super funds. They thus followed the fashion leaders and got 3% added to some awards. This then spread to our cureent plans for 12%. As fashion leaders continue to use super and specifically SMSFs the maority of the population think super is a great idea. All it will take is Jamie Packer to state that he is not interedted in having money in a super fund and our super system will collapse. I would guess that half the population would rather have the cash now than when they turn 65. I have no sympathy for Jamie losing his super tax advatage but I do not want him to be the fashion leader that says super is not useful for him and thus encourage the rest of the population to give up on super. In my opinion this is a serious threat and is very poorly understood by public servants and politicians who do not understand public culture and trends.
Pat on 01 Feb 2013 11:55 AM
@Peter: who pays attention to what Jamie Packer says?
Greg on 26 Mar 2013 10:21 PM
Tax breaks for Golden handshakes..who cares?
LAFA...what has that got to do with super? That's FBT law.
The Millionaires dental scheme huh? Thats about medicare rorting, not super. So other than the dependent spouse offset (once again wow big deal) what exactlky are they taxing in super?
The real absolute super killer has been around for 3 years now. The $25K contribution limit with no exceptions even if you have minimal super balances. Now that's Labor stupidity and super fund raiding at it's best. I can finally afford to top up my super and find that I can't because of this ridiculous cap. I have noted that the Liberals were very quite about this. OH I see. They get all their massive pensions tax free while they screw the rest of us!