With leadership tensions rife within the federal government, Bluepoint Consulting principal Tony Bates told ifa sister title SMSF Adviser that while the Coalition government will eventually want to adopt some of the recommendations of the tax white paper as policy, “legislation is still a way off”.
“I think it would be politically challenging for the government, given the current political climate for the Coalition,” said Mr Bates. “I think they’d be pretty brave to take it on prior to an election.”
Aside from examining and changing the franking credit regime, which Mr Bates said is currently very generous, the tax white paper will likely also look to even up taxes between the pension phase and accumulation phase.
“They’ve said they’re looking at the relative rate of tax between the pension phase and the accumulation phase and they’ve been quite clear they want to even that up,” said Mr Bates.
“The way I’d interpret that is there’ll be taxes on pensions whereas at the moment a super fund in pension mode is tax exempt so I see that changing and likely to be policy.”
Everyone was happy to take Howard’s tax cuts and Gillard’s free $1,000 when times were good, yet only a tiny percentage of the population is willing to contribute when times are tough. This is because the majority of the population live and think week to week or month to month, no big picture thinking about the next 20 years…
The kicker fir many smsf holders in pension phase will be a triggering of HECs FeeHelp charges and Loss of a senior sheath Card by deemed income obce taxable..these impacts could turn any changes toxic due to the multiplier effects..which are substantial. This government can’t even do single sector policy convincingly let alone actually look at side effects across portfolios. Oh! Fir at least ONE Afilt in government let alone adult government.
A tactic would be to assess a levy on untaxed earnings within the fund after pension ohase, around 5% would work (just talk to any competent financial planner as to what will happen instantly if it’s over 5% of course) but that would work without triggering a chain of politically toxic side imoscts
Yes, we have policy paralysis at the moment thanks to an obstructionist Senate and that’s unlikely to change anytime soon. In fact, I suspect it will be a way of life for all future governments. It is a huge problem for t he future of t his country. Anyway, in regards to taxing super and pensions, it would be a brave government to bring in new taxes on pensions phase, possibly tantamount to electoral suicide given the baby boomer voting cohort which is only getting larger.
bewildered, i believe they announced no “adverse” changes. that doesnt mean no tinkering at all.
Hardly speculation when it is Liberal Party Policy not to make any changes to superannuation in the first term of parliament. Both Arthur Sinodinos (2013) & Matthias Cormann (2014) have stated at the National SPAA conference that any proposed changes to superannuation would form part of the coalitions next election policies.