Speaking at The AFR Super and Wealth Summit, Financial Services Minister Stephen Jones said Labor plans to tackle tax concessions once an objective of the superannuation system has been put into legislation.
Promising to consult widely, Mr Jones said that with an objective that is settled, “we can then talk sensibly about taxation issues”.
People with millions of dollars in their superannuation are receiving tax concessions that ultimately have a “real cost to the budget”, the Minister said.
“The concessional taxation of superannuation is a lightning rod for discussion. When I see the size of some fund balances, I’m not surprised,” Mr Jones said.
“For example, we have 32 self-managed super funds with more than $100 million in assets. The largest self-managed super fund has over $400 million in assets.”
“If the objective of superannuation is to provide a tax preferred means for estate planning, then you could say it’s done its job pretty well. Don’t get me wrong, the government celebrates success but the concessional taxation of funds like these has a real cost to the budget,” Mr Jones continued.
Citing Mercer, the Minister said the tax concessions on a single $10 million self-managed super fund could support 3.1 full-aged pensions.
At the time, Mercer also found that tax concessions offered to SMSFs with balances exceeding $10 million could fund 240,000 full age pensions each year.
“The conversation has already begun,” Mr Jones said.
“Those who support the status quo will need to demonstrate how concessional tax arrangements for high balance super funds meet the common objective we’ve all agreed on. Those who argue for change will need to show that that approach meets the objective.”
Enshrining an objective in law
On Labor’s resolve to legislate an objective of super, Mr Jones said: “We can’t put the cart before the horse”.
“There is no other foundational public policy that has existed for 30 years without a clear and shared understanding of what its objective is, but here we are.”
Mr Jones noted that the lack of a national agreement around superannuation limits policy debate.
“There are many opinions about how the super system can be improved and many of these opinions are well meaning. But can we have a conversation about the directions if we don’t know what the destination is? This is why we’ve announced a conversation, the need to legislate an objective for superannuation. With a clear objective, we can be focused and have a meaningful conversation,” the Minister said.
“With an agreed destination enshrined by parliament, we can embark on the journey to a more prosperous retirement,” he concluded.
Just watch them use the example of those with $100m as an acceptable reason to put their hands in many other pockets.
The politics of envy is always wrong.
Here we go again. Labor putting their hand into our pockets. Do the politicians ever consider that the person with $millions is Super has probably paid $millions in tax along the way, as they worked hard, succeeded financially, supported the economy and our social security system., Further now because of their success they are not a burden on society as they are well privately funded, Isn’t that enough of a contribution. Just leave the hard working successful people who have contributed most to this country alone in retirement instead of squeezing every last cent out of them,
I understand the need to potentially remove tax concessions for the excessively large super funds, but why drag all funds that will never get to those lofty balances down with them? There are more smaller balance funds than larger so why not introduce the reduction in tax concessions for those balances over $10m for example? Why tar everyone with the brush of the rich?
Rather than $10M, how about $1.7M ($3.4M per couple) indexed? Just tie the max super balance to TBC. Simple and equitable.
They already do this to an extent.
You cant make non-concessional contributions once your total super balance is above that limit. These huge balance funds are a thing of the past.
This is just stupid policy that will turn people off saving for their future. A lot of people already dont trust the system due to the consistent changes considering they need to lock money up within for so long.
Unbelievably short sighted policy, as usual. Any savings, that will be relatively minimal, will be offset by more people on the age pension in future and we all know theyll blow the savings on other bad policy straight away.
Stephen Jones literally promised to not tinker with the system. I know we shouldn’t be shocked that was a lie, but damn.
Quote: “[b] “There is no other foundational public policy that has existed for 30 years without a clear and shared understanding of what its objective is, but here we are.”
Really?
This is mis-information, incorrect, misleading, and dishonest.
30 to 40 years ,the Labor Government promoted Superannuation in the form of SMSFs , Industry Funds ,compulsory Super SGC, as a method for Australia to get pressure of the Social Security system and the Age Pension.
There was a clear position the Labor Government wanted to entice the public to do. That is prepare for your retirement by being a “self-funded retiree”.
Now, this dishonest politician is telling us there is no clear policy.
No regard to the 10s of 1000s of self funded retirees who took up the Labor Government policy and did EXACTLY what the government wanted them to do.
Are some SMSFs massive? Of course. Some people are always more successful than others in every field of business and finance.
Tread carefully here. To punish citizens who followed your “philosophy,”, your rules, your objectives and actually achieved your goal of develop a “self-funded” retiree group is a massive political fraud.