New analysis of ATO data from the Financial Services Council (FSC) today shows over 500,000 current taxpayers will be adversely impacted by the Government's proposed 30 per cent tax rate on balances above $3 million.
CEO of the FSC Blake Briggs said: "If the Government does not index the proposed $3 million superannuation balance cap, 500,000 Australian taxpayers will breach the cap in their life and face a 30 per cent earnings tax, including 204,000 Australians under the age of 30.
"500,000 impacted Australians is over six times the current Government estimates, which only takes into account balances that are currently over $3 million.
"Leaving the cap stuck at $3 million will mean that in today's dollars a 30-year-old will have a real cap of around $1 million, calling into question the intergenerational fairness of an unindexed cap.
"Caps in the superannuation system are indexed to ensure generational fairness, so that each generation gets the same outcomes and benefits from the superannuation system."
The modelling also produces real examples of actual taxpayer impacts. Examples include:
- A 25-year-old IT professional earning $100,000 with a current superannuation balance of $35,000 would reach the $3 million threshold by the time they retire at age 65.
- A 45-year-old school principal earning $150,000 today with a current superannuation balance of $650,000 would reach the $3 million threshold by the time they retire at age 65.
- A 55-year-old dentist earning $220,000 today with a current superannuation balance of $1,400,000 would reach the $3 million threshold by the time they retire at age 65.
The FSC will work constructively with the Treasury through the consultation process on details that still need to be resolved, including:
- The long-term impact if the $3 million threshold is not indexed;
- The interaction with the transfer balance cap;
- How investment earnings will be calculated and whether they will be applied to unrealised gains;
- Impacts on consumers in accumulation phase who are unable to adjust their super balances; and
- How contributions from structured settlements on personal injuries will be treated.
