Super news for March 2023

Government’s super changes supported by voters

The reaction to the government’s proposed increase in the taxation on superannuation investment earnings for people with more than $3 million in accumulation accounts, has met with criticism from some industry bodies and support from the wider community.

As we reported, the government plans to double the tax rate on investment earnings from the current 15% to 30% starting in 2025–26.

The SMSF Association said it did not support the announcement, saying it would add further complexity and undermine confidence.

“Our preference has always been to have no cap on balances but if the Government has determined on this policy, having a ‘threshold’ with earnings on balances above the cap taxed at a reduced concessional rate would be our preferred option,” SMSF Association chief executive officer Peter Burgess said.

The Financial Services Council said that its analysis found that over 500,000 current taxpayers would be adversely impacted by the changes over time.

“If the Government does not index the proposed $3 million superannuation balance cap, 500,000 Australian taxpayers will breach the cap in their life and face a 30% earnings tax, including 204,000 Australians under the age of 30,” FSC chief executive officer Black Briggs said.

“Leaving the cap stuck at $3 million will mean that in today’s dollars a 30-year-old will have a real cap of around $1 million, calling into question the intergenerational fairness of an unindexed cap.”

But it appears the general public supports the changes to tax policy. When asked ‘how strongly do you support or oppose reducing tax concessions for people with superannuation balances over $3 million, so the returns on their super are taxed at a higher rate than returns for people with lower balances’ in Essential Research and Qualtrics fortnightly Essential Report, 50% of respondents said they strongly supported or somewhat supported the move, with 31% saying the neither supported or opposed the change and just 19% saying they opposed it or somewhat opposed it.