The federal opposition’s intention to spare SMSFs that have at least one age pensioner from its plans to scrap cash payments for excess franking credits adds further complexity and confusion for retirees.
The Self-managed Independent Superannuation Funds Association (SISFA) welcomed Labor’s announcement to spare more than 300,000 low-income retirees, including 13,000 SMSFs, from the impact of its franking credits policy proposal, but argued the carveouts highlight the flaw with the approach to this issue more broadly.
SISFA said exemptions and carveouts will add complexity, and tracking and data problems that will lead to confusion.
Furthermore, carving out age pensioners and other allowance recipients before 28 March 2018 draws a line in the sand, which will increase inequity and uncertainty in future for SMSFs that have a member who becomes eligible for the age pension after this date.
SISFA managing director Michael Lorimer said: “Once you start carving out people from the changes, you introduce anomalies and distort planning decisions to maximise a person’s retirement position.
“You have to seriously question whether this policy initiative is worth the effort here.”
SISFA also argued any significant tax changes should only be considered as part of an informed discussion and analysis of the broader tax and welfare framework, rather than a one-off policy.
“Ad hoc policy development that undermines sound, long-term retirement planning is never going to produce sound outcomes for retirees,” it said.
“Long-term planning needs to be fostered by all political parties if Australia is to maintain and improve its world-class retirement system.”