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Labor moves on super concessions policy
The Federal Opposition has placed key elements of its superannuation policy on the table this week, specifically targeting the level of tax concessions to those with high superannuation balances.
The shadow Treasurer, Chris Bowen, confirmed media speculation on the issue by declaring that, if elected, the Australian Labor Party would make two changes to the superannuation/retirement incomes regime.
- Ensure earnings of more than $75,000 during the retirement phase are taxed at a concessional rate of 15 per cent instead of being tax free; and
- Lower the threshold for the 15 per cent High Income Superannuation Charge from $300,000 to $250,000 to better align tax concessions.
Bowen said the measures would result in saving of $14.3 billion over 10 years.
He said the measures would affect approximately 60,000 account holders with superannuation balances in excess of $1.5 million and would not impact pensioners or part pensions.
"Labor will also remove the 10 per cent tax offset for defined benefit income above $75,000, estimated to effect approximately 9500 account holders," Bowen's announcement said. "In addition, Labor will lower the threshold on the High Income Superannuation Charge from $300,000 to $250,000 a year."
The statement said that instead of a 30 per cent tax concession, those earning more than $250,000 a year would receive a 15 per cent tax concession on contributions.
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TOP PERFORMING FUNDS
ACS FIXED INT - AUSTRALIA/GLOBAL BOND
Fund name
3y(%)pa
1
Spire Oaktree Opportunities XI First Close USD
66.99 3 y p.a(%)
2
Hills International
62.62 3 y p.a(%)
3
DomaCom 4/27 Crombie Avenue Bundall QLD 4217 Australia
32.95 3 y p.a(%)
4
Acadian Global Equity Long Short Class A
32.82 3 y p.a(%)
5
CFS FC Acadian Global Equity Long Short
32.44 3 y p.a(%)
Compare the pair - note to ACOSS Goldie, LABOR - Shorten, Bowen, GREEN - Milne
1. Age Pensioner Couple - Home owner - Home $1.5m, Account Based Pension $220,000 (minimum drawdown $11,000), Bank Account $20,000, Full Age Pension Entitlement with benefits $33,717 p.a. cpi adjusted)
Wealth including home $1.74m
2. Self Funded Retiree Couple - Home owner - Home $600,000, Account Based Pension $2.5m ($2m voluntary after tax contribution, Concessional Component $500,000 and minimum drawdown), Bank Account $20,000.
Wealth including home $3.12m
Position 21 years later assuming c.p.i 2.5% and Account Based Pension earning a net 6% p.a. (after all fees and charges).
A. Full Pensioner Couple - Home now valued at $12m, Account Based Pension $231,100, Full Age Pension Entitlement $56,630 p.a. cpi adjusted.
Wealth now including home $12.25m
B. Self Funded Retiree Couple - Home now valued at $4.8m, Account Based Pension $2.62m, No Age Pension Entitlement.
Wealth now including home $7.44m
Where is the equity and fair play. Before further taxing frugal self funded retirees the Assets Test for the Age Pension entitlement needs to include the family home. For asset rich - income poor, age pensioners a claw back formula devised to recover the age pension so paid using the RBA cash interest rate till the asset is sold. The savings to the national account could be monumental.
Further the Deferred Capital Gains Tax liability now amounting to some 3% of $1.9 trillion held in Superannuation needs to be collected by making ALL Superannuation Funds segregate the asset holdings backing the "Accumulation" and "Retirement Income Paying" phases and thus facilitate the collection when a member moves from the Accumulation to Retirement Income phase.
The current 9m net tax payers can not be expected to fund and subsidise the inheritance for the advantage of the beneficiaries of asset rich - income poor age pensioners.
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