The Budget, recently delivered by Treasurer Wayne Swan, contained few surprises for the superannuation sector, which, given the scope of changes currently in the pipeline, is no bad thing.
That said, there were a few new measures, which should be welcomed across the sector. They are consistent with other significant reforms which are designed to bring greater integrity and equity to our trillion-dollar-plus superannuation system.
We need to bear in mind that the purpose of the superannuation system is to provide a dignified retirement for all Australians – not just wealthier Australians.
First off the rank the Government decided to provide some welcome relief to those who inadvertently breach the concessional contribution caps. The capacity to refund up to $10,000 in excess concessional contributions preserves the integrity of the original policy change, while providing for investors who make genuine errors.
There are those who would like to see a return to the higher concessional contribution caps, but the Government has stuck to its guns.
However, it is worth restating that the vast majority of superannuation members would find it difficult, if not impossible, to breach the concessional superannuation caps.
Even the most trenchant critic must admit that there must be some limit on the extent of tax concessions for contributions.
We also need to understand that nearly one in three superannuation members (in excess of 3.5 million workers) gain little or no tax concession on Online casino concessional contributions, as their marginal tax rate is too low. Thankfully there are reforms in the pipeline to address this inequity with a new Government co-contribution, which will effectively refund the contribution tax Simply navigate to the Roulette online column and click on Strategy. for these individuals.
Other welcome Budget changes include the introduction of administrative penalties for self-managed super fund (SMSF) non-compliance, competency requirements for SMSF providers, and some tightened restrictions on SMSF investments.
These SMSF measures are entirely justified.
Wealthier Australians gain the greater benefit from superannuation tax breaks, due to them gaining the largest discount from their usual marginal tax rate on contributions and fund earnings. On average, SMSF members have a taxable income twice that of members online casino of other funds (nearly $100,000 compared to $50,000); and the average super balance of $450,000 for SMSF members is 18 times that of the average $25,000 balance for members of other super funds. Finally, we shouldn’t forget nearly one in four SMSFs have balances in excess of $1 million.
Notwithstanding the average wealth of the typical SMSF member, there are increasing numbers of ordinary workers being inappropriately advised to start up an SMSF. Around one quarter of SMSFs have assets below $200,000 – a level below which typical SMSF fees significantly erode returns.
This serves of course to highlight the importance of the Government’s proposed Future of Financial Advice (FoFA) reforms, which were finalised by Minister Shorten around Easter.
To an extent, the debate regarding concessional caps, rather than the equity of distribution of tax concessions, is a microcosm of a broader debate about the integrity and equity of the superannuation system. The social contract implicit in compulsory super is that tax concessions are the trade-off for mandating that employees contribute nine per cent of their wages and that these contributions be preserved until retirement. To ensure this social contract retains its integrity, tax concessions must be distributed fairly – with the priority on ensuring that all employees can access a concession in the first instance.
This is not to say that people seeking to top up their super later in their working lives should not receive access to concessions for higher voluntary contributions – particularly women who have had interrupted careers – but that care needs to be taken that the benefits of super do not once again become the preserve of the wealthy.
David Whiteley is chief executive of Industry Super Network.
