SMSF members concerned about government plans to add a new tax to superannuation earnings should not overlook that super will remain the best vehicle to hold and manage retirement savings, according to the head of an SMSF administration firm.
Heffron managing director Meg Heffron said despite the government’s proposal to impose a 30 per cent tax on the earnings of superannuation funds with balances of more than $3 million, super will still offer many advantages not found outside that environment.
“I would press on with whatever you were going to do before because until $3 million, or $6 million per couple, superannuation is still the best retirement savings vehicle in town,” Heffron said during a recent online briefing.
“Even after $3 million there will still be plenty of people who do the sums and say ‘I don’t like this extra tax, but even above $3 million, I’m still going to leave my money in super’.
“There will be people on the SMSF side who fall into this bucket, a lot of them are retirees and I’m going to put words in their mouth here, but would be more than happy to pay a bit of extra tax.
“What they object to, and certainly what I am arguing against from a policy point of view, is it’s just a bad way to do it. Taxing unrealised gains just doesn’t work as far as I’m concerned.”
She noted the proposal was not yet law and was dependent on the government winning the next election so SMSF and superannuation members should continue to execute the strategies they have in place.
“We’ve got a lot of negative and positive commentary about this to come. We’ve got a consultation to come as well,” she said.
“If you were thinking about putting a downsizer contribution in, if you were thinking about making concessional contributions and claiming them as a tax deduction, I would not let this change my plans and would continue to do whatever I am allowed to do.
“I also wouldn’t be stripping my fund of assets. If you’re at an age where you’re allowed to take money out whenever you like, I wouldn’t be pulling it out right now as it remains to be seen whether this will even get in, and if so, in what form.”
