Half of clients to lose on super

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The Government has set itself up against small business, property investors and every day Australians, according to Chan & Naylor director Ken Raiss.

Raiss says the latest tax changes will create a lose-lose environment for up to 50% of SMSFs and short-change Australia of future infrastructure investment.

“Whilst the Government has argued it will only target super funds with balances of $2 million or more, funds with just a quarter of this figure may in better years accrue earnings revenue that easily exceeds the $100,000 cap and therefore be subject to the punitive higher rate of tax,” says Raiss.

For example, over the past 12 months the Australian share market has exceeded the 20% growth necessary for someone with an investment balance of $500,000 in their super to see a return of $100,000 or more if cashed out for retirement purposes or to pay out home loans.

Raiss says that as the compulsory contributions increase from 9% to 12% over time, younger Australians who indubitably will accumulate substantial funds in their super will find themselves in the $500,000 target ‘super pool’ many years before retirement.

He says the Government lacks the knowledge and the vision for potential wide-scale super fund investment in domestic infrastructure projects. Heads of large super funds have readily admitted that they have funds to invest but no dedicated infrastructure assets in which to invest thanks to the Government’s short-sightedness, according to Raiss.

“There is no shortage of capital to invest and as a properly managed tool for the future, super should be a mechanism for large-scale capital investments that deliver tangible community benefits,” said Raiss.

He believes that super funds could be invested into a national first-time buyer mortgage scheme which would help many Australians get onto the property ladder and over the long term bridge the growing property gap.

“We should be thinking in terms of abundance instead of scarcity but, sadly, the Government can’t see can’t see the forest for the trees,” said Raiss.

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