Discord over super reform impact

The Association of Superannuation Funds of Australia (ASFA) has hit back at reports the Federal Government's super reforms, announced last Friday, had underestimated the number of Australians it would impact.

The Combined Pensioners and Superannuants Association (CSPA) and Plato Investment Management are just two industry commentators that have said the assessment of the impact of super reforms was based on an assumed 5 per cent annual return.

ASFA said the confusion stemmed from the fact that many super funds, including self-managed super funds (SMSFs), had double-digit returns in prospect this year, driven by increases in share prices.

But according to ASFA chief executive, Pauline Vamos, fund members should not confuse the amount of their investment earnings credited to their super account with the amount of investment earnings that would be reported to the Australian Taxation Office (ATO) if the proposed measure went through.

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ASFA said the assessed amount would come from interest received, dividends and rents where:

• Dividend yields were typically around 4.75 per cent annually

• Rental yields averaged under 5 per cent, and

• Interest rates on bonds and term deposits were under 5 per cent and unlikely to rise in the immediate future.

ASFA said the Government's announcement indicated that any capital gains would only be included on a prospective basis.

"Given the carve-out above of all capital gains this financial year and the carve-out of most capital gains in financial years over the next decade with only partial inclusion after 2024, the amount of assessable income reported to the ATO for the purposes of assessing the proposed tax is unlikely to exceed 5 per cent of account balance for the next decade in almost all cases," ASFA said.