The partner of a top chartered accounting firm has revealed the public’s loss of confidence in the retirement savings system is already evident only a week after the government proposed the introduction of a new tax on superannuation member balances greater than $3 million.
PWC financial advisory partner Sharyn Frawley noted her firm is already fielding inquiries from clients as to whether they should be exiting their money from the superannuation environment now in order to avoid being subject to the government’s new policy.
Further, Frawley revealed clients are already postponing and re-evaluating investments they would have normally made through their SMSF to see if there is a more tax-effective vehicle via which to make the asset purchase in question.
“We’re already [having clients say] ‘we won’t do that now, we might look at a different structure to do it in’ and so it’s that confidence in the super system [that is already being eroded] even though this is not going [to be introduced until 1 July 2025] or may not [be introduced] in the next few years,” she told attendees of an Institute of Financial Professionals Australia (IFPA) webinar this week.
“So not knowing what’s happening or how this all [might] eventuate really is stopping and stifling that [type of] investment.”
Sladen Legal business law principal Phil Broderick suggested the new tax on member balances in excess of $3 million has the danger of completely undermining the original purpose of the superannuation system.
“Internally [the IFPA] committee [has] had discussions about this and we will make a submission on the purpose of super. We’re [most concerned] that the purpose of super was initially supposed to be a shield to protect [savings] against tinkering,” Broderick said.
“But our concern is it might be turned into a sword so that once you’ve reached that level that the government thinks is enough for super, then anything above that is fair game.”
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