Superannuation was not set up for cosmetic surgery, says finance minister Stephen Jones.
In a period of intense debate about the purpose of super and super tax concessions, the government is being slammed by the Opposition for attacking ‘middle Australia’.
While the government has now acted on super tax concession, with Treasurer Jim Chalmers announcing yesterday that tax rates paid by Australians with superannuation account balances worth more than $3 million will double – from 15 per cent to 30 per cent –the ‘purpose’ of super is still to be formalised.
Mr Jones says some Australians are “gaming the system” to fund activities such as cosmetic surgery.
“Superannuation was not set up for cosmetic surgery,” he said. However, his wrath is not directed at the patients who have made use of the loophole, but those who are actively encouraging its use.
“People who are trying to abuse the system, and this is not directed at the patients here, it’s directed at the surgeons … and schemes promoting it, they run the risk of ruining it for everyone else who is doing the right thing.”
According to Australia Tax Office (ATO) figures, funds released early from superannuation totalled $573 million in the 2021-22 financial year. Of that, around $545 million was spent on medical treatment, which included $234 million on weight loss, $171 million on dental treatment and $45 million on IVF.
The Albanese government wants the purpose of super to be enshrined in proposed new legislation.
Outlining that proposal, Dr Chalmers said: “The objective of super is to preserve savings to deliver income for a dignified retirement, alongside government support, in an equitable and sustainable way.”
Part of Labor’s proposed strategy included a cap on super balances of $3 million and that is set to take effect from 2025-26 and apply to about 80,000 people.
Former Liberal PM John Howard calls the reforms “an attack on middle Australia driven by an ideological belief people’s retirement savings are a political ‘honey pot’ for Labor and unions”.
But the government points out that only 1 per cent of Australians have a super balance over the $3 million mark. In addition, the legislation does not prevent Australians from having more than $3 million in super.
The Opposition is also concerned that the reforms will prevent Australians from accessing their superannuation to buy a first home. The Liberals took that policy to the last election.
Opposition Leader Peter Dutton says that any future government led by him would reverse any legislation that would prevent such access.
“One of our first acts in government will be to overturn the legislation, which has been driven by ideology and not by super fund members’ best interests,” Mr Dutton said.
Mr Jones said that the government’s changes will not only ensure superannuation is used for its intended purpose of funding retirement, it will also help balance the books. He said the current structure was “not sustainable on current budget settings and we’re having to grapple with that”.
“We have inherited budget problems, we’ve got a structural deficit and we have to deal with all of it,” he said.
What do you think of the changes? Has the government got it right or is this, as Mr Howard claims, are they an attack on middle Australia? Why not share your thoughts in the comments section below?
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