The Institute of Financial Professionals Australia (IFPA) has identified five items it would like amended in its latest submission to the government regarding the proposed 15 per cent tax on individuals with a total super balance over $3 million.
The industry body acknowledged there have been no changes to the measure from the time it was announced to the time the government released the associated draft legislation.
Specifically, it has asked for the removal of unrealised capital gains from the calculation of earnings for the new tax to allow refunds for any losses from the tax already paid under the measure rather than have them carried forward, to have indexation applied to the threshold, to allow any tax liability under the measure to be deferred, and to exclude certain items from the determination of a person’s total super balance in an income year.
Commenting on the recommendation to allow for refunds on incurred losses, IFPA head of superannuation and financial services Natasha Panagis noted doing so would prevent a situation where tax paid on unrealised capital gains would be lost should an individual’s total super balance permanently fall below $3 million.
“This is preferred rather than carrying forward the loss that may or may not be used at a future date, depending on market volatility, which will be common as markets go through different cycles. As such, losses should only be carried forward if there was no tax paid in the past,” Panagis said.
With regard to amending the calculation of the amount to be taxed, IFPA called for elements such as minimum pension payments and limited recourse borrowing arrangement amounts all to be excluded from the determination of earnings.
“Statutory amounts such as minimum pension payments that must be drawn should not be added back to a member’s total super balance, as well as amounts withdrawn under the law for the payment of superannuation-related taxes, such as excess non-concessional contributions, and the associated earnings to ensure there is no double taxation,” Panagis said.
“Other amounts that should also be permanently excluded from a member’s total super balance include death and disability pensions, along with other remediation payments such as compensation amounts received by a member’s superannuation fund from a financial service or insurance provider for inappropriate financial advice.”
The submission is the second IFPA has put forward on the issue, having previously provided a response in April this year.
