The National Institute of Accountants (NIA) has called on the Government to explain its so-called contradicting comments regarding self-managed superannuation funds (SMSFs) being used as tax minimisation vehicles.
Treasury’s briefing folder for the returned Government called the Red Book, which was recently made available to the public, states that “the superannuation system is increasingly leaking revenue, with [SMSFs] now the tax minimisation vehicle of choice”.
The Treasury also stated the practical operation of the trust taxation system is degrading and is ultimately not sustainable, adding it supports the Australian Future Tax System Review’s recommendation that the trust rules should be updated and rewritten.
NIA chief, Andrew Conway, said the institute is infuriated over the comments about the SMSF sector released in the Red Book and sought an explanation from the government.
“We find it really regrettable that the Government’s own policy of encouraging Australians to save for their future is actually being challenged by this Treasury statement,” said Conway.
He said it is “unfortunate” if the Treasury has a view that over 800,000 Australians in a self-managed super fund were “in it to avoid tax”.
According to the Australian Prudential Regulation Authority (APRA) statistics, self-managed superannuation funds held the largest proportion of superannuation assets as at 30 June 2010, accounting for 31.8 per cent of assets.
APRA’s statistics also found that SMSF assets have increased by more than $56 billion over the year to 30 June 2010.
Conway stressed the institute agrees that SMSFs need to operate properly and that the vast majority of trustees are “in it for the right reasons”.
“Like in any instance, when you have individually over 420,000 self-managed super funds, you’re going to get a very small minority of those who will not abide by the rules and they need to be detected; but to label all SMSF trustees as tax avoiders is a really regrettable comment,” Conway said.
