Self-funded retirees could be a soft target
Self-funded retirees are at risk of becoming a soft target for tax reform which would help the government repay money borrowed to finance COVID-19 relief measures, says an SMSF administrator.
Heffron managing director Meg Heffron said the question on many people’s lips now we are coming out of restrictions is: “Who pays back all the money borrowed to finance much-needed government support?”
Ms Heffron suspects SMSF clients, particularly retirees, are at most risk.
“Many would be the first to acknowledge that the tax system has given them enormous benefits in the last 10-15 years and would not begrudge winding back some of the current concessions. As the asset owners in our community, they are possibly a soft target for tax reform,” she said.
“But while these same people are not losing their jobs or businesses, they are seeing their dividend income fall, their investment portfolios buffeted, income from investment properties dry up and their children struggling financially. It would only be natural for them to feel somewhat aggrieved if asked to shoulder a disproportionate share of the burden going forward.”
She added that the wider self-funded retirement sector may also be looked at, not just SMSFs.
“The government has spent a lot of money, for good reason. Somehow, it will need to replenish the coffers and is talking about growing our way out and creating jobs and that will be great,” she told selfmanagedsuper.
“I also think that they will look to ‘where the money is’ to see if there are changes they can make to claw back some dollars, and their gaze will naturally fall on the pools of wealth held by retirees – often in super – and the outcome may well be a reduction in tax concessions.
“I suspect that any reduction in tax concessions will focus more on retirees than accumulators.”
Ms Heffron said this was her personal opinion in relation to how the government could increase its income without taxing incomes during a period when it is also encouraging people to start spending again.
So the government that "is committed to no new taxes and reducing existing taxes" may be about to introduce some new taxes. What a surprise. My wife and I are self funded retirees with no money in superannuation - yes, we took it out and manage it ourselves - thus we have no vested interest in superannuation taxation at all. However, we believe that no government should introduce legislation that has a retrospective effect -we believe that any new taxes should apply only to superannuation funds accumulated after the legislation is passed into law. Since this won't produce the revenue stream that the government so urgently needs, all of you who have super, watch out! Better still, lobby your MPs NOW and try to prevent increased taxation on your retirement savings. I wish you luck - our MP Dr David Gillespie, National Party, doesn't answer his emails even when we ask hime direct questions about issues that are important to us.