ASFA comment on speculated changes to super

Amid the current speculation around changes the Government may make to superannuation taxation concessions in the upcoming Federal Budget, the Association of Superannuation Funds of Australia (ASFA) believes it is important to note the following key points:

• Decisions taken by the Government since 2009-10 in regard to superannuation policy settings will result in an additional $8.3 billion dollars in revenue flowing into the Budget over the Forward Estimates.
• Any further measure taken must be equitable and also be able to be administered by the ATO. Although the ATO has information on super fund members’ income and super account balances, helped in particular by new reporting requirements implemented in 2012, it does not have knowledge of members’ investment earnings.
• Particularly important in regard to implementation of any changes should be the recognition by the Government that there are three types of superannuation arrangements, namely defined benefit (DB) funds, pooled superannuation funds, and self-managed superannuation funds (SMSFs). Each of these arrangements is impacted differently by changes in policy settings and the implications of this must be considered before any changes are made.
• These various practicalities need to be taken into account in any review by the Government into the way investment earnings within super are taxed. Any measure in this area would face significant implementation challenges.
• It is also important to keep in mind that increasing taxation drives behaviour. For example, changing superannuation tax concessions would lead to higher income investors elsewhere, including negative gearing of property and other investments. This would have the potential to create a bubble in property prices. There would also likely be a detrimental effect on equity markets and in the ability of Australian firms to access financing if significant amounts were switched into other investments.
• ASFA reiterates its call for a Parliamentary inquiry into tax efficient investments, first called for in a media release issued in May 2012, following the 2012-13 Federal Budget. Superannuation tax concessions must not only be set with the long-term view of ensuring better retirement incomes for Australians, but must be considered within the holistic investment context and in light of changing demographics and increasing longevity.

For further inquiries, please contact:

Pauline Vamos, CEO, 0433 169 342

Megan McDougall, Media and Communications Co-ordinator, (02) 8079 0849

About ASFA

ASFA is the peak policy, research and advocacy body for Australia’s superannuation industry. It is a not-for-profit, sector-neutral, and non-party political national organisation whose aim is to advance effective retirement outcomes for members of funds through research, advocacy and the development of policy and industry best practice.