Financial planners and their clients will have to choose between superannuation policies that expand the availability of tax concessions or those that increase superannuation guarantee (SG) contributions in the upcoming federal election.
The observation was made by wealthdigital technical manager Rob Lavery, who said: “The superannuation policies the two major political parties are taking to this election reflect long ideological trends each has held.”
Lavery pointed out that historically the coalition has tended to focus on expanding the availability of superannuation tax concessions.
He pointed out coalition-led governments have introduced multiple increases in the maximum age for contributions, SMSFs, reductions in work tests and increases in contribution caps.
“This trend continues with the coalition promising reduced work-test requirements and an increase to the maximum age for spouse contributions,” he said.
“By contrast, the ALP has previously implemented policies that increase superannuation guarantee contributions, reduce discretionary contribution caps and increase overall tax on super.
“The ALP is doubling down on this approach in the 2019 election, announcing policies to strengthen SG coverage and roll back amendments that introduced catch-up concessional contributions and made personal deductible contributions widely available.”
He also noted voters were faced with two distinct taxation ideologies made up of a suite of future tax cuts from the coalition compared to the ALP’s policies that tax those with investable assets.
Labor’s signature tax policies in this election focus on removing tax minimisation strategies for those with investable assets, he said.
“The removal of imputation credit refunds, the reduction in the CGT (capital gains tax) discount and the application of a minimum tax rate to discretionary trust distributions will only impact those with the requisite income and investments to have shares, CGT assets and income-splitting trusts,” he said.
“While the coalition appears to want to flatten the current progressive tax rates, the ALP plans to collect more tax from those with greater assets.
“The ALP has shown the values it would champion should it lead the next government. Its policies promote the interests of those on lower incomes at the expense of the wealthier. By contrast, the coalition’s policies in these areas seem to follow the status quo and will increase the utility of super incrementally.”
