The series of tax and superannuation-related changes proposed by the federal opposition fit under an “umbrella thematic” to make industry funds the most concessionally taxed vehicles in Australia, according to a long-serving industry expert.
I Love SMSF founder Grant Abbott said the proposals related to franking credit refunds, taxing family trusts at 30 per cent, removing negative gearing for new investments and reducing capital gains tax deductible discounts to 25 per cent had different effects on industry funds compared to SMSFs.
Abbott said industry funds were able to apply franking credits to those in the fund in the accumulation phase to reduce the level of tax paid, which was a more difficult process for many SMSFs that had moved into pension phase.
He labelled the situation as unfair and said there was no level playing field for how the two types of funds were being treated on the issue of franking credit refunds.
Additionally, he pointed to plans to remove limited recourse borrowing arrangements and catch-up provisions for unused concessional contributions caps as further evidence the Labor Party was making it more difficult for SMSFs to exist.
“There is one conclusion that can be drawn from what we are seeing, which is Labor hammering everything but the industry funds. They are looking to make those funds the pre-eminent and most concessionally taxed vehicles in Australia,” he noted.
“Each of the measures point to that and both [opposition leader] Bill Shorten and [opposition treasury spokesman] Chris Bowen have said they are not going backwards on these measures.”
The comments were made as part of a webinar focused on strategies SMSF advisers could use to respond to the proposed changes in the event the ALP wins the upcoming election.
Abbott was also critical of changes made to concessional contribution caps by then-treasurer Scott Morrison, adding the current government had also caused damage to the super sector by creating the $1.6 million transfer balance cap.