The SMSF Owners’ Alliance (SMSFOA) has called out the Association of Superannuation Funds of Australia (ASFA) for singling out super funds with high account balances as the starting point for tax concession discussions.
“SMSFOA believes that everybody, individuals and companies, should pay the taxes set by the government,” SMSFOA executive director Duncan Fairweather said.
“People who have accumulated savings through hard work, having paid their fair share of tax and more along the way, should not be penalised for their success.
“Given the government’s intention to have an open and sensible conversation about tax so that we can have a lower, fairer and simpler tax system, stirring up envy with headline-grabbing tall poppy numbers is not a constructive contribution to the debate, which should be about how every Australian can be a taller poppy.”
As part of a report released last week, ASFA chief executive Pauline Vamos encouraged the community to start questioning whether it should fund growing tax concessions on very high balances.
However, Fairweather said the report did not provide a balanced picture nor did it help advance an objective tax debate.
“What’s lacking in ASFA’s report, and in much commentary on this issue, is how much more tax these people pay in the first place,” he said.
“As the Treasurer [Joe Hockey] pointed out [last] week, 2 per cent of taxpayers pay 26 per cent of income tax and the top 20 per cent of taxpayers pay 65 per cent of income tax.
“Fairness can’t be judged by looking at superannuation tax benefits in isolation from income and other taxes paid.”
A better perspective would be gained by taking into account all the taxes paid over a lifetime and all tax concessions received, he said.
“Hopefully a more objective picture will be gained through the current tax white paper process,” he said.
“A focus on the tax benefits derived from large superannuation account balances is looking at the issues through a very narrow prism.
“These balances were legitimately accumulated in accordance with the old rules, so under current contribution caps, it is no longer possible for people to amass very large amounts in super.”
He said ASFA should be concerned about why most of the members of the managed funds it represented were not going to have enough super to fund the association’s own notion of a comfortable retirement, rather than worrying about a small number of high account balances and retirement incomes.
“This is due in some part to the high fees charged by Australian Prudential Regulation Authority funds, which concerned David Murray’s Financial System Inquiry and is a key reason why people are deserting the major funds and setting up their own SMSFs,” he said.
