The federal government is gearing up to crack down on the superannuation accounts of high income earners, after Prime Minister Julia Gillard outlined a number of cost-saving measures to be pursued ahead of the May budget.
The reports of further regulation to be imposed on wealthy super accounts comes as Gillard confirmed the election will be held on September 14 – an announcement that has relieved business groups weary of political uncertainty.
Yet some leaders in the business community are concerned over early signs the current government will focus on superannuation and business for savings.
Yesterday, Julia Gillard outlined some measures where the government will attempt to claw back savings, referencing a number of measures for high income earners which have already been abolished.
“The dependent spouse tax offset, the tax breaks for golden handshakes, tax concessions on super for high income earners, the millionaires’ dental scheme and fringe benefits loopholes for executives living away from home … all gone,” she said.
The Australian Financial Review is now reporting the government will focus on ending tax-free superannuation withdrawals for those with very high super balances. This comes as Treasury has already previously argued some of these concessions are not sustainable.
The report also claims business tax concessions are in the firing line. These concessions were originally suggested as part of a trade-off for not lowering the company tax rate – the rate has remained at 30% after Labor abandoned the promise to cut the tax.
Graeme Colley, head of education at the Self-Managed Superannuation Professionals Association of Australia, says it’s concerning the government may focus on super but says its members usually don’t have accounts over $1 million – the likely threshold target.
“For the majority of self-managed super funds, the average balance is about $600,000, and the median is lower than that. The average super fund member is well below the median.”
Paul Drum, head of policy at CPA, also said the notion business concessions would be targeted is disappointing, but noted the government “has been looking under every rock” for savings.
Peter Anderson, chief executive of the Australian Chamber of Commerce and Industry, told SmartCompany the business community is already concerned over superannuation changes – any further hits on business wouldn’t be welcome.
“The private sector has only limited capacity to bare the burdens of a budget in deficit, so the priority must be to take cost pressures off the private sector so our labour market remains strong.”
Peter Strong, head of the Council of Small Business of Australia, said despite the report, there has been positive dialogue between small business and the government.
“I think they’re starting to understand you can make a decision that has quite a detrimental impact on small business,” he says.