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?”
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