Super tax changes may create planning opportunities
The Government's changes to the superannuation taxation arrangements for fund members producing income of over $100,000 a year is likely to give rise to new opportunities for financial planners, according to specialist law firm DBA Lawyers.
In a column to be published in Money Management next week, DBA Lawyers director Daniel Butler and lawyer Tina Conitsiotis have also warned that the new arrangements, if they ever become law, may also capture those falling below the threshold.
They said members who realised capital gains might be caught in the tax net as well as those producing more than the $100,000 threshold.
"New planning opportunities will emerge and the new tax is likely to result in several new trends such as more assets being withdrawn from super and a move away from pension to accumulation mode," Butler and Conitsiotis said.
They suggested the new pension tax might create arbitrage opportunities whereby investing outside of the super environment proved more tax efficient for certain members.
"This is especially so, as over recent years, the concessions in super have attracted many people contributing most of their investable assets previously held outside of super into the super environment to take advantage of the pension exemption (both within and outside the super fund) when someone attains 60 years and draws a pension," the two lawyers said.
They said people would be tempted to move assets outside of super to minimise their tax — and this arbitrage opportunity was likely to see a significant shift of assets away from super, thereby undermining the amount that would be raised from the new tax.
"However, it will take some time to determine how solid these trends will become if the new law is passed," they said. "In addition, other planning measures are likely to develop which are designed to minimise the impact of this new tax."
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