A superannuation expert is warning the Federal Government’s proposed changes to superannuation is ‘stealing money from the younger generation’.
The Government is seeking to increase the concessional tax rate for super balances above $3 million to 30% from July 1, while also planning to tax unrealised capital gains.
SMSF auditing expert and Managing Director at Reliance Auditing Services, Naz Randeria, has been passionately campaigning against the changes since they were announced almost two years ago, saying most Australians don’t realise the true implications of the proposal.
“The changes will undermine the overall stability and structure of what is one of the best superannuation systems in the world and force more people to rely on the Age Pension in retirement, resulting in increased aged care spending and completely blowing out future budgets.”
She says the Government’s continued claim that the proposal will only impact around 80,000 of Australia’s wealthiest is wrong and insulting.
“The younger generation are essentially being told that they have no chance of ever having $3 million in their superannuation by the time they retire, so they don’t need to worry about the changes – it’s counterproductive and belittling.
“The Federal Treasurer is essentially saying to our youth, do not dream big or aim higher, because if you succeed, I am going to punish you. They’re being robbed of any real opportunity to save and be self-sufficient in their retirement. It’s essentially stealing money from the younger generation.”
Ms Randeria also believes that with future inflation, regional disparity and the continued rise in the cost-of-living, by the time today’s 20-year-olds are retiring, $3 million is likely to be considered modest, or potentially even insufficient.
“Common sense would dictate that we encourage today’s children to save for a rainy day so they can continue to live a comfortable lifestyle in their later years, but instead they’re going to wear the burden of their money being used to fund the Federal Age Pension, as more people will be relying on Government support in retirement instead.
“Let’s not forget, we’re living longer, which means people need to fund their retirement and age-related costs for longer to maintain quality of life with standard of living.”
Ms Randeria says aside from the younger generation, there are also other groups that stand to be significantly disadvantaged by the changes;
- Farmers: The National Farmers Federation has expressed serious concerns about the impact of the changes on farmers, warning families will be forced to sell farm assets and property to meet unrealised capital gain liabilities. Ms Randeria echoes these concerns and says farmers will be punished for factors outside their control while politicians conveniently shift financial planning goal posts.
- Start-Ups: Many start-ups rely on investors and venture capital for funding, some of which may come from superannuation funds. However, if investors are to be taxed on unrealised gains, it creates a disincentive, and start-ups may find it more difficult to source funding in the future. “What kind of message does that send? That Australia is not a place for innovators and entrepreneurs, because the Government will punish you for your successes with measures such as these.”
- All Taxpayers: Ms Randeria says the measures fundamentally change the superannuation system and create a disincentive to save, which will force more people to rely on the Age Pension in years to come. “That’s a significant cost burden for taxpayers to have to fund.”
The final increase in the Superannuation Guarantee (SG) rate comes into effect from July 1, rising from 11.5% to 12%, and the potential for further increases in the future. Superannuation will now also be paid on Paid Parental Leave payments.
Ms Randeria says she’s supportive of those measures, but they’ll only serve to disadvantage people should these new proposed changes be passed.
“On the one hand we have changes coming into effect that boost superannuation balances, and yet at the same time the Government is trying to pass legislation that will punish you for boosting your balance too much.”
“It’s hypocritical, wrong, and makes absolutely no sense.”
About Reliance Auditing Services
Reliance Auditing Services is a specialist independent auditing services firm, specialising in audit of self-managed superannuation funds and also providing external audit and assurance services to clients across Australia. The team offers more than 25 years’ experience across a diverse range of businesses and organisations.
Naz Randeria is available to interview.
Media Contact:
Lisa Barnes
Ph: 0416 583 672
Email: lisab@profilemedia.com.au