Close to 80 per cent of people are in favour of a cap on concessional tax breaks for account balances in superannuation, based on a survey carried out by Investment Magazine.
The survey was undertaken to gauge the popularity amongst Investment Magazine’s audience for a cap on tax concessions – a proposed solution to question 22 of the Tax Inquiry. (‘How appropriate are the tax arrangements for superannuation in terms of their fairness and complexity? How could they be improved?).
The survey ran for a week on Investment Magazine’s website and had 104 respondents with 79.80 per cent in favour of the cap.
Below is a graph showing at what level those in favour of the idea want the cap.
The results show that 85.35 per cent of those in favour of the idea believe the cap should be $3 million or below with 57.69 per cent believing it should be between $1.5 million and $2.5 million.
The most popular point for the cap was $2 million receiving 31.25 per cent of the vote.
Close to 10 per cent (9.61 per cent) believe the cap should start at $5 million, though only 4.8 per cent believe it should be in the $3.5 million to $4.5 million range.
The Association of Super Fund of Australia (ASFA) believes the cap should be set at $2.5 million based on its research which is responding to the Financial System Inquiry, Tax Inquiry and the Intergenerational Report.
“We would definitely caution against going lower than $2.5 million. Primarily because of increased longevity and the growing trend of retirees living in rental accommodation, as opposed to owning their own home, but also because people need financial capacity to cope with rising health care costs and other age-related expenses,” Pauline Vamos, chief executive of ASFA said.
ASFA’s research states:
- “Around 210,000 Australians have superannuation account balances in excess of $1 million, with around 70,000 in excess of $2.5 million
- 475 individuals have an account balance in excess of $10 million, receiving an average tax free income stream of $1.5 million annually
- 24,000 retired self-managed superannuation fund (SMSF) members have balances of more than $2 million, and receive an average income stream of $216,000 per year tax free
- In contrast, around 232,000 members with balances of less than $1 million received an average income of around $38,000.”
Details of their research and position can be viewed here.
The Australian Institute Superannuation Trustees is still considering its position on a cap and has said its “submission will examine the full spectrum of superannuation taxes in the accumulation and post-retirement phase with a view towards to a less-complex and fairer tax regime.”