An SMSF specialist has criticised Treasury’s consultation process regarding the proposed new 30 per cent tax on individual superannuation balances above the nominated $3 million threshold for ignoring a key element of the measure.
SMSF Alliance principal and SMSF specialist mentor David Busoli identified the proposed $3 million threshold as one issue requiring further discussion that Treasury has not invited any comment on.
“The paper assumes a $3 million unindexed cap and seeks input within that context. Much has been made of the measure affecting only 80,000 members. That no one is mentioning the 69,000 of these who have less than $5 million is curious given that this measure is being promoted as one of equity and not a simple tax grab,” Busoli noted.
He said many unintended consequences already identified by analysis preformed on the information sheet about the measure could be addressed if the threshold for the new tax was set at the higher level of $5 million.
While he noted questions remained over the tax, he acknowledged there are potential upsides of the superannuation equity tax measure as outlined in the consultation paper.
“On the plus side, due to the complications it introduces to the calculation, those limited recourse borrowings now counted as an asset for total super balance purposes, related-party loans and loans participated in by members whose benefits are unrestricted non-preserved are likely to be generally disregarded for the total super balance count,” he noted.
“This would indeed be an equity measure as it would remove the mutually contradictory scenario whereby affected members are prevented from making non-concessional contributions to liquidate a loan so they can make the non-concessional contributions to do so.”
Treasury released the consultation paper in late March to provide an opportunity for stakeholders to discuss the government’s proposed superannuation earnings tax on members with total superannuation balances above $3 million.
Submissions for the consultation paper closed today.