Australian Independent Retirees (AIR) has expressed its concerns over the effect of the changes to the capital gains tax (CGT) rules handed down in the budget, claiming the move will increase the tax burden on older Australians and undermine retirement confidence.
Further, AIR suggested the amended tax approach will disadvantage rather than help young Australians looking to save to buy their first home.
“The removal of the long-standing 50 per cent CGT discount and changes to investment taxation rules will disproportionately affect retirees who rely on modest investment income to maintain financial independence,” AIR chief advocate Wayne Strandquist said.
“Self-funded retirees are not speculators, they are Australians who have worked, saved and invested prudently over decades in order to fund their own retirement.
“The government should be encouraging self-reliance and long-term saving, not penalising those who have done exactly what successive governments have encouraged them to do.”
Strandquist pointed out the new CGT provisions will have a significant impact on retirees as they often rely on investments in shares, fixed interest, property and managed funds to supplement their retirement savings, particularly where they have a lower superannuation benefit balance.
“Changing the rules late in life creates uncertainty, undermines confidence and penalises people who no longer have the ability to top up their savings through employment,” he explained.
“Retirees with lower taxable income generated by capital gains will now pay a minimum of 30 per cent tax rather than be taxed at the applicable tax threshold.
“Governments should not encourage Australians to save for their own retirement and then change the taxation rules after they have retired.”
In addition, he noted retirees did not deserve to be disadvantaged for past decisions made in adherence with the law.
“Older Australians deserve fairness, certainty and respect for the financial decisions they have made in good faith under existing laws,” he indicated.
Darin Tyson-Chan
Editor
Darin is the founder and publisher of Benchmark Media, an independent publishing house whose mastheads include financialobserver, selfmanagedsuper and smstrusteenews. He has been covering the financial services space for over a decade and in this time he has worked for a variety of trade publications. Darin has also written for the Money section published in The Sydney Morning Herald and The Age.
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