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Accounting firm CPA Australia warns that the Government has dramatically underestimated the number of Australians who will be impacted by changes to superannuation.
The results of a survey conducted this week of members in public practice has revealed the overwhelming majority of respondents – 70 percent – believe the Government’s superannuation changes will affect more than 6 percent of their clients.
Further, almost 40 percent report they will affect over 20 percent of their clients and more than a quarter say 30 percent of their clients will be impacted.
The findings are in stark contrast to the Government’s insistence that the changes will only affect a very small percentage of Australians.
On Budget night, Treasurer Scott Morrison outlined the most significant structural changes to the Australian superannuation system since compulsory superannuation was first introduced.
CPA Australia’s CEO Alex Malley said the results confirm there is widespread uncertainty and confusion created by the proposed retrospective changes.
“When the changes were announced on budget night we said they had been made without consultation and the Government was completely underestimating the impact they would have.”
“Our members are at the coal face every day advising Australians, young and old, from all socio-economic groups, about their retirement savings options. They have been inundated with questions from their clients about what these changes will mean to retirement savings,” he said.
The Government has continued to insist that less than 4 percent of Australians, said Malley, would be affected by these changes.”
“Instinctively we knew that wasn’t right and so we decided to poll our members to get a sense of the magnitude of the issue. Our results clearly show that the Government has underestimated the impact of its changes.”
“The changes were announced less than a week before the Government called the election and went into caretaker mode meaning there will be no more details forthcoming about how this will work.”
“The Government seems to be scrambling to explain the changes and Treasury can’t give us any extra detail.”
From 1 July 2017, the Government will lift current restrictions and allow individuals under the age of 75 to claim tax deductions for personal superannuation contributions to eligible superannuation funds.
The government will also be lifting restrictions in order to allow individuals up to the age of 75 to claim tax deductions on personal contributions to eligible super funds, up from 65.
Also to be introduced from July 2017 is a Low Income Superannuation Tax Offset to ensure that those earning less than $37,000 are not paying more tax on their super than they are on their actual income.
Morrison said that, among others, this offset will assist around 2 million low income women in particular to build their superannuation savings.
Australian seniors advocacy group COTA Australia welcomed the changes, with chief executive Ian Yates saying, “COTA is pleased to see the government move in a direction that ensures superannuation is used for the purpose it was originally intended – as a way for people to save for their retirement rather than a wealth accumulation scheme for Australia’s highest earners.”
He said the lifting of age restrictions on personal contributions to those aged up to 75 acknowledges that more and more people are choosing to work well into their 70s, and “sends a positive signal about mature age employment.”
Yates added, “It’s also good to see the efforts made to recognise that many women retire with low superannuation because their careers are often broken by caring for children and ageing parents.
“The opportunity to make ‘catch-up’ contributions and for spouse tax offsets are a step in the right direction. More will still need to be done to ensure women have equitable retirement incomes, but it can’t all be done by the super system itself.”