The Institute of Public Accountants (IPA) has called on the government to repeal legislation that prohibited personal concessional contributions where the members earned more than 10 per cent of their income from employment services.
“We see no valid reason for the restriction on members making personal concessional contributions,” IPA chief executive Andrew Conway said.
“This prohibition is inequitable for a number of Australians.
“For example, a person who may have investments that provide a passive income and also works part-time to supplement that passive income is limited to the super contributions made by their employer.”
Similarly, small business owners who worked part-time would not be able to claim tax deductions for super contributions if their income as an employee exceeded 10 per cent of the contribution, Conway said.
“The IPA believes the source of the concessional contribution should not matter and this one piece of legislation should be repealed as soon as possible,” he said.
“Australians should be subject to a concessional contributions cap that does not discriminate against the source of the contributions.”
Last week, the IPA also said the Financial System Inquiry’s proposal to reinstate the banning of limited recourse borrowing arrangements (LRBA) provided plenty of scope to specifically address all the issues raised without resorting to a total prohibition.
Conway said the issue was not SMSF borrowing per se, but inappropriate advice provided by unlicensed advisers.
“A sledgehammer approach may not be the appropriate way to eliminate the use of poor-quality advice relating to SMSF gearing,” he said.
“We need better analysis of ways to address the risks surrounding borrowing before merely imposing an outright ban.
“No case has been made, including no evidence presented, that there is a risk to the super system as posed in the final FSI report.”
Interestingly, there were also no alternative measures other than an outright ban to mitigate some of the concerns raised, he said.
“For example, if they are worried about the diversification, why not consider excluding LRBAs for funds with small balances,” he said.
The IPA made this recommendation as part of its 2015/16 pre-budget submission.
