Superannuation tax changes should not be applied retrospectively, however, both major parties had broken that convention, which would result in hardship and unfairness for trustees, according to the SMSF Owners’ Alliance (SMSFOA).
“Both political parties have now announced what amount to retrospective tax policies, both effectively taxing our already saved superannuation assets,” SMSFOA chairman Bruce Foy said.
“Under our implicit contract with government to forego current spending and lock up these assets for many years, which we have already done, they agreed to quarantine these assets and their earnings from tax in the future.
“Based on this contract, people have made life-changing plans for their retirement, including when to stop work, where they will live and the standard of living they expect in their, hopefully, long years in retirement.
“Both the Labor and Liberal/National parties have now reneged on performing their side of the bargin.”
Further, there had been a long-standing common law legal convention that citizens should not be subjected to retrospective laws, and courts had tended to interpret such laws narrowly, Foy said.
Moreover, the Senate was watchful in upholding that principle in respect of taxation matters unless the law was to correct a clear case of abuse and avoidance, he said.
The SMSFOA is attempting to gather together a Coalition of Organisations Against Retrospective Taxes and also writing to the Prime Minister and Treasurer to point out the hardship and unfairness of the retrospective policies.
SMSFOA executive director Duncan Fairweather said both parties claimed their new taxes on earnings in retirement were not retrospective.
“We don’t accept this,” Fairweather said.
“The coalition’s new $500,000 limit on non-concessional contributions (NCC) is backdated to 2007.
“Any such contributions made since then will count towards the new limit.
“Some people may not be able to make any more contributions if they have already contributed $500,000, [while] others will only be able to top up to the cap.”
He stressed that would disrupt the retirement savings plan of people who were intending to make NCCs to boost their superannuation savings.
“Both the coalition and Labor plans to impose limits on tax-free earnings in retirement will be retrospective because they will impose a new tax on the earnings on savings that have already been made,” he explained.
“The contract has now been torn up by both of the major parties. They are reneging on their promise.”