Taxing earnings will generate fear
Self-managed super fund administrators Xpress Super and SuperGuardian has lashed out at Labor's proposal to tax earnings above a certain level in the pension phase, saying it fosters more confusion and fear.
Xpress Super and SuperGuardian chief executive Olivia Long argued that superannuation should not be looked at as a revenue source, as it defies its purpose of being a retiree saving system.
"Labor's proposal of a 15 per cent tax on earnings at and above $75,000 in the pension phase looks like back-of-the-envelope numbers, and assumes the tax will only kick in for those with super balances of at least $1.5 million.
"That is expected to affect about 60,000 people and the supposed ‘kick' to revenue, estimated at $1.4 billion a year, is nothing better than speculation," Long said.
Noting that the average Australian Prudential Regulation Authority fund has seen double-digit returns in 2013-14 (12 per cent) and the average fund return stood at seven per cent since super began in 1992, Long said people with super balances below $1.5 million will be hit.
"The seven per cent return means the funds under management needed to generate a $75,000 income stream drops to a tad below $1.1 million , hardly enough for a retiree to live a life of luxury, especially when the average life expectancy is now in the mid-80s and rising," she said.
Long said many self-managed superannuation fund trustees put their business premises in the fund as part of their retirement savings, meaning they will feel the string of the 15 per cent tax regime if they see a high return one year if they sell their property assets.
AUTHOR
Malavika Santhebennur
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