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SMSF, Superannuation, Tax

Trustees dislike $3m soft cap

SMSF trustees $3 million tax

A recent sector survey has found nearly half of SMSF members believe the proposed $3 million soft cap is a bad policy initiative.

The latest sector research has shown nearly half of SMSF trustees believe the proposed additional 15 per cent tax on earnings of total super balances above $3 million is a bad idea.

The “Vanguard/Investment Trends 2023 Self Managed Super Fund Report” revealed 46 per cent of trustees surveyed indicated it was a bad idea, while another 12 per cent were unsure about the merits of the proposed policy and wanted to be provided with more detail on the measure.

Another 18 per cent of SMSF members said their attitude was neutral toward the policy, while 24 per cent thought imposing an additional tax on retirement savings balances above $3 million was a good idea.

The results reflect greater concern about the new tax from the SMSF sector, with separate Investment Trends data showing 44 per cent of the general superannuation population suggesting its implementation is a positive step.

Of the 46 per cent of people who identified the policy as a bad idea, 47 per cent said it was either somewhat likely or very likely to affect them personally.

“[Of this cohort] I think half are opposed because they think it will affect them. The other half will be affected, but perhaps prefer saying that they are taking a principled position,” Investment Trends head of research Dr Irene Guimatsia noted.

“But in reality when we compare the answers of SMSF investors with those of [other] superannuation members we think the answers are quite clear. Aversion is clearly due to the fact that they’re a lot closer to being affected.”

Further, the data indicated trustees with larger super balances were opposed to the proposed policy. To this end, 49 per cent of SMSF members with a total super balance between $1 million and $2.5 million communicated negative sentiment toward the measure, with 55 per cent of individuals with total super balances above $2.5 million expressing the same view.

The “Vanguard/Investment Trends 2023 Self Managed Super Fund Report” is the 18th annual edition of the study. The results were based on the responses of 2290 SMSF members to an online survey conducted across February and March.S

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