Super no longer attractive for entrepreneurs
The recent changes to the superannuation system, passed by the Federal Government in Parliament this week, have made superannuation less attractive for entrepreneurs as it is no longer an investment tool to build their wealth, according to tax strategist, Pilot Partners.
The firm's tax partner, Murray Howlett, noted that the level of trust into super among the business community significantly declined and forced entrepreneurs to look for alternatives that offered the same asset protection and safety net.
He referred to the changes in the reform package announced by the Government in the 2016-17 budget, which redefined the objective for Australia's superannuation scheme as "to provide income in retirement to substitute or supplement the Age Pension".
The changes included higher taxes on super contributions for high-income earners, changes to super contribution caps as well as restrictions to transition to retirement pensions (TTR). They were also seeking to impose a balance limit of $1.6 million per person before existing tax concessions disappeared.
Howlett also stressed that entrepreneurs had long-struggled to invest in superannuation due to the restrictions inherent in existing laws.
"In its original form, superannuation provided a safe place to grow a nest egg for retirement. But the proposed new definition has changed this for many entrepreneurs," he said.
"Many entrepreneurs no longer trust the system and they're fearful that they won't be able to access their money how and when they want it.
"Alternatives do exist. We are currently advising many of our clients on this very topic and we believe this is only going to continue as the goalposts keep changing."
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