A newly published reports says that Labor’s recently flagged super tax changes will mostly impact those over 60. The Association of Superannuation Funds of Australia (ASFA) report says older Australians will be most affected by new tax rates on super balances over $3 million.
Of those affected by the higher tax rate, 90 per cent will be aged over 60. In a media release accompanying the report, the AFSA said: “Introducing higher rates of taxation for balances over $3 million is projected to lead to a 9.5 per cent decrease in tax concessions in relation to investment earnings.
Those who will be affected are mostly aged 60 and over, with around two-thirds male. Around half are retired with those still in employment or business mostly involved in professional roles.”
The findings have been detailed in AFSA policy and research paper, ‘Equity and superannuation’, released last Thursday.
With respect to the Labor’s flagged tax increase, the report acknowledges a relatively low percentage of Australians will be affected. The majority of these could be classed as affluent, the report concludes.
Based on ATO data, in 2019-20 there were around 35,000 superannuation fund members with superannuation balances of over $3 million.
“[ATO] statistics indicate that around 65 per cent of those affected by the proposal are male. Those affected are relatively old, with around 50 per cent aged over 70 and around 90 per cent aged over 60.
“Those likely to be affected are relatively affluent on a number of measures. Around 25 per cent owned a rental property, around 25 per cent received dividends of over $40,000 a year and around 15 per cent had total income for tax purposes of over $500,000.”
Superannuation Guarantee for paid parental leave
In an accompanying statement, ASFA deputy CEO Glen McCrea also called for Superannuation Guarantee payments on paid parental leave.
“The upcoming Federal Budget provides an opportunity to further improve equity in Australia’s superannuation system,” he said.
“Introducing Superannuation Guarantee (SG) payments on paid parental leave and increasing the upper threshold for the Low Income Superannuation Tax Offset (LISTO) would substantially assist low to middle income earners, particularly women.”
The ASFA recommends the upper threshold for the Low Income Superannuation Tax Offset (LISTO) be increased to $45,000 a year. In addition, it recommends the maximum amount be $700 a year.
In championing such changes, the report highlights the relief superannuation provides to stresses on Australia’s aged pension system.
“Without super, there would be more than 500,000 extra individuals receiving the Age Pension,” the accompanying statement claims.
“Superannuation is substantially improving retirement incomes for nearly two million retired Australians by providing regular income streams. Around 600,000 households, nearly one million Australians, are mainly supported by superannuation in retirement.”
Mr McCrae says the Albanese Government will have the opportunity to strengthen the system further next month.
“The upcoming Federal Budget provides an opportunity to further improve equity in Australia’s superannuation system,” he said.
The full report is available through the ASFA’s Research and Papers page.
Also read: Super delivers positive return in first quarter of 2023
I find it difficult to cry for those with over $3m who have been getting a more than generous tax break
Totally agree with you. Three million in super is a large amount of money and much more than is needed for a comfortable lifestyle.
About time these wealthy tax dodgers had their gravy train reduced.
It’s pack rat mentality. These old codgers with over 3 million sitting in a Super account usually have NO real need for it & have NO intention of spending it. I work in retirement planning and most of them will also have other income streams as well from property , dividends & index funds.
Suggest to them to actually USE or spend some of it & you get the most peculiar look from them. Since most of them have already lived at least 80% of their life expectancy & no guarantees of seeing the sunrise tomorrow ,,there’s really nothing they need & not a lot of energy to do things.
Inheritance …? Yeah , thats mainly going to benefit their grandkids , since at nearly 80 , their own “children” are already nearly looking at retiring . So in the end it’s highly likely the grandkids they rarely see , will marry someone they’ve never met & get rinsed in a divorce & lose most of it.
So , given the above ….why not Tax the stuffing out of it.? Most will go to waste anyway & was never needed in the first place.
Love this, Keith.
How many over 60’s have over 3million in Super ? Those that have obviously are not spending it so they won’t miss a bit of extra tax especially as they only paid 15% in the first place.
Yep, The Superannuation system is being used as a low tax environment for very wealthy people to stash their cash.
Tax rort all the way but I believe the $3mill should be indexed to inflation or it will end up taxing our grandchildren or future Aussies when $3mill is equivalent to $500k in today’s money.
So what if they are taxed a bit more!
Do the maths, retire with $3m and take out $100k, it will last 30 years with no earnings.
Superannuation is for you retirement not as an inheritance!