Login
ISCOVER
Staff Reporter
Gadens Lawyers is lobbying the government to change its proposed plan to tax super earnings of more than $100,000 per annum so that self-managed super fund holders are not inappropriately penalised.
To continue reading the rest of this article, please log in.
Looking for more benefits? Become a Premium Member.
Create free account to get unlimited news articles and more!
Looking for more benefits? Become a Premium Member.
From 1 July 2014, the government is planning to tax superannuation pension funds and annuities 15 per cent on earnings above $100,000 in one year instead of their being tax free.
The change comes on the back of reforms to double the contributions tax from 15 per cent to 30 per cent for concessional contributions made on behalf of individuals earning more than $300,000.
According to the government, approximately 16,000 people should be affected in the first year.
However, Gadens Lawyers’ Jon Denovan said, in reality, a lot more people could be affected, as capital gains could push many individuals with small self-managed super funds into the $100,000 territory.
“Many self-managed super funds hold assets for a significant period, such a shares, real estate and other investments. Even though a fund may be quite small, and its average annual income small, a significant capital gain could be realised in a single year when these assets are sold,” Mr Denovan said.
“When even a modest capital gain is added to the ordinary ‘regular’ income of the fund, the $100,000 could be exceeded. To address this inequity, Gadens will lobby the government to average income of funds over four years and for the ‘super tax’ only to apply when the average annual income exceeds $100,000 over four years.
“Failure to make this change may skew investment strategies and extend the tax unintentionally to ‘average’ pensioners.”
