Labor’s proposed changes to excess dividend imputation credits are the latest example of this, Rice Warner said.
Arguing in an insight, the financial consultant said Labor’s proposal shouldn’t come as a surprise to the super industry, given a history of politically-fuelled changes governing the system.
Nevertheless, 35 years of changes makes long-term planning look tricky, Rice Warner said.
“The Financial System Inquiry in its final report of December 2014 set a proposed primary objective of superannuation “to provide income in retirement to substitute or supplement the Age Pension”,” Rice Warner related.
“More than three years later, this simple objective is still stuck in the Senate and the relationship between superannuation, social security and taxation remains fluid.
“Uncertainty about the future and growing cynicism towards all political parties mean that much of the population is sceptical about superannuation despite its incredible value for almost all Australians.”
Continuing, the consultant said “ill-informed commentators” only help to fuel the tarnishing of the superannuation brand.
“Consequently, there is national ignorance and apathy.”
Speaking specifically about Labor’s amendment to exempt pensioners and SMSFs with at least one pensioner-member in them prior to 28 March, Rice Warner said the attack is “better targeted” but still an “extraordinarily bad policy”.
Instead, the consultant suggested that a better way to tax wealthy SMSFs would be to implement a limit on the total amount allowed to be held in superannuation at retirement.
“At (say) age 65, limit an individual to (say) $3.2 million in total pension and accumulation and make them withdraw the excess (tax-free). Then, returns on the assets will be taxed in their personal return like any other investment.”