How superannuation funds are taxed has been constantly debated and changed since the system’s inception, but in recent years a trend towards more targeted taxation has appeared, Antoinette Elias told Nest Egg.
Ms Elias, a senior staff member at consulting firm EY (formerly Ernst & Young), said the most recent changes to the super system were a good indicator of how tax will be applied moving forward.
“The changes that came in on 1 July 2017 are really about targeting the tax concessions and the superannuation benefits to where they’re needed most; to get people off the age pension,” she said.
“They’re not really targeted at people that were always going to be self-funded in retirement because they’re high-net-worth individuals, for them to use the superannuation concessions as broadly and as generously as they have been able to.”
Ms Elias predicts that further tax concessions are unlikely to be introduced into the system except in cases where they may help groups of people with “serious deficiencies” in their retirement savings.
“If there was an area where the government was to introduce more tax concessions, I think it would be trying to target the people that don’t have enough in super,” she said.
“I think that is one area where we could see greater superannuation concessions and encouragement, but at the other end with high-net-worth individuals I don’t think we’ll see, I think if there’s any further tax changes it will actually be to continue to limit the entitlements they can access through tax concessions.”
So how can ordinary Aussies stay abreast of increasingly targeted and niche tax laws in a system which Ms Elias noted is already infamous for the complexity of its rules?
“If you understand the base rules, you understand the change,” Ms Elias said.
“My advice to ordinary superannuation members regarding the tax rules and how they will impact members, and what that means for their future retirement benefits, is whilst there’s no easy way to get across all that, if you are engaged and interested there’s actually a lot of material available, and you don’t have to pay for a lot of it.”
Ms Elias said people can get a wealth of information from their super fund and financial institutions, much of it for free, though noted those looking to address specific personal problems will likely need to speak with a qualified professional.