The Coalition intends to block any moves to remove tax breaks for Australians with multimillion-dollar superannuation accounts, Opposition Leader Peter Dutton said on Thursday.
Treasurer Jim Chalmers has warned the superannuation system risks becoming unsustainable without a review of the tens of billions in tax breaks afforded to it.
Although no firm proposals have been made, senior ministers suggested accounts with balances in the millions could have the same rate of tax applied to their earnings as people who negatively gear properties or use investment trusts.
|
Treasurer unveils plan for superannuation
10 News First – Disclaimer |
|
‘Legitimate questions’
“There’s a legitimate question to be had about how much the Australian taxpayer, through the budget, subsidises your retirement savings through generous tax concessions,” Assistant Treasurer Stephen Jones said.
The tax break is nominally for retirement funds but its beneficiaries include entrepreneurs using super to run start-up companies, people under 30 and dozens of super wealthy Australians with balances over $100 million.
The government has not said at what level current tax levels might be lifted, if any mooted proposal were included in the May budget.
Education Minister Jason Clare quoted a threshold of $3 million on Thursday, while public policy experts say the threshold should be $2 million.
In either case, between 35,000 and 80,000 Australians would lose out if their funds’ taxation rates were brought into line.
At between 0.0025 to 0.005 per cent of Australians, it’s a constituency with as much wealth parked in superannuation as the 66 per cent of the country with balances below $100,000.
Mr Dutton said the Coalition would block any moves by Labor to change the arrangements around superannuation.
“The whole idea of superannuation is it provides for people’s retirement so that they can lead a dignified retirement,” Mr Dutton said.
“It isn’t a piggy bank.”
He said the changes would likely be in the May budget and accused the government of bringing the Aston by-election forward to get it “over and done with” before the public was across the detail.
“If the government had a plan, they should have detailed it before the last election instead of springing it on people now,” he told Sydney radio 2GB on Thursday.
He said the government would likely start by targeting people with large super balances and then work their way down.
“They’ll just keep coming back to the well and, all of a sudden, you’re a couple of rungs down and people who didn’t think they were in line, they’ll be having to pay additional tax,” he said.
Dr Chalmers said the Coalition, which first advocated similar changes in 2016, was guilty of hypocrisy.
But one policy expert said at its upper echelons the superannuation system was no longer about providing for Australians in retirement.
According to the Grattan Institute, tax breaks given to funds with balances above $2 million amounts to $32,000 each; aged pensioners receive less than $25,000 a year.
‘Inheritance scheme’
“Billions of dollars a year in tax breaks to wealthier people who will never spend them in retirement [have made super] a taxpayer-funded inheritance scheme for wealthier Australians,” Grattan Institute’s director of economic policy Brendan Coates said.
Grattan Institute modelling shows that tax concessions for superannuation will take more out of public finances than is currently spent on the aged pension in little more than a decade.
Mr Coates says that applying tax to the earnings of funds worth more than $2 million would be the politically easiest step available to the government as it looks for money to cover the mounting costs of aged care, disability care and defence.
“Other taxpayers should no longer be reaching into their own pockets to top up your super balance once you’ve got $2 million,” Dr Coates said.
The Grattan Institute, a non-partisan think tank, says the government must not stop reform there.
It advocates a range of adjustments, including lowering the cap on concessional contributions from $27,500 to $20,000, which would return about $6 billion to the budget.
Independent ACT Senator David Pocock said he was open to reviewing current tax concessions.
The New Daily is owned by Industry Super Holdings
