INTHEBLACK February 2024 - Magazine - Page 25
P O D C AS T
WITH INTEREST PODCAST
The With Interest podcast features economic updates and developments
for the business world. Here are some highlights from a recent episode.
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YOUR GUIDE TO SUPER’S PROPOSED CHANGES
In October 2023, draft legislation was proposed by Australian Treasurer Jim Chalmers aimed at
reducing tax concessions for those with super savings exceeding A$3 million. Richard Webb,
CPA Australia’s senior manager – financial planning and superannuation policy, shares expert
insights into the proposed changes.
THE PROPOSED CHANGES
“The draft bill implements the announcement
of February 2023 to tax earnings from
superannuation for balances over
A$3 million at an additional 15 per cent.
“This is in addition to ordinary super
fund earnings tax, which is normally either
15 per cent in the accumulation phase
or 0 per cent in the drawdown phase.
A calculation is done of your change in
total balance over a normal financial year
adjusting for contributions and withdrawals.
“The amount of earnings over A$3 million
is then broken out as a sort of a pro-rata
calculation based on one’s holdings at the
end of the year. Once the ATO have the
necessary information that allows them to
make an assessment, they will send through
an assessment to the taxpayer, who would
then either need to pay it out of their pocket
or forward it to their super fund for payment,
or a combination of both of those methods.”
KEY ISSUE OF INDEXATION
“It is important to note that the A$3 million
threshold is not intended to be indexed.
This is actually anomalous in the world of
superannuation as almost everything else that
fund members expect to be indexed is.
“Contribution limits are indexed, the transfer
balance cap is indexed, and thresholds for any
applicable taxation of lump sum benefits are
also indexed.
“Fund members don’t expect to see their
benefits eroded by thresholds that are not
indexed, and they shouldn’t be surprised by
finding out the hard way in the future that
they are suddenly subject to what is basically
‘bracket creep’ on what will eventually be a
relatively low balance.”
RICHARD WEBB,
CPA AUSTRALIA
THE SUPER OBJECTIVE
“The ‘Better Targeted Superannuation
Concessions’ measure is a big change,
which has far-reaching effects not only on
superannuation, but the very idea about
superannuation as a savings vehicle.
“When a government announces a
measure like this one, there is complex and
contradictory messaging about whether the
message has changed. Are we trying to stop
money flowing into super, or are we now
saying that it is OK, because we now have a
new tax for higher balances? At the same time,
we still have no tax relief for people with lower
balances and who are on lower incomes. They
may still be financially punished due to the
normal super earnings tax, which might be
higher compared to savings outside of super.
“One objective of super is a crucial set of
guidelines that will help us understand what
the answers are to these questions.”
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intheblack.cpaaustralia.com.au 25
