Open letter to Chalmers urges reconsideration

Yasmine Raso

Senior Journalist, Financial Newswire

17 April 2023

The managing director of self-managed super fund (SMSF) auditing services firm, Reliance Auditing Services, has penned an open letter addressed to Federal Treasurer Jim Chalmers, urging him to reconsider his planned changes to Australia’s superannuation system.

Naz Randeria wrote, with “the interests of our economy at heart”, that the proposed increase of the concessional tax rate of superannuation from 15 per cent to 30 per cent for those with balances over $3 million has “struck a dagger into the very heart of the Australian superannuation system and undermines the notion that you can put long-term plans in place to benefit your retirement”.

“All those who have played by the current superannuation rules and been encouraged by various contribution measures to boost their super balance during their working lives are now finding that the goal posts have shifted,” she wrote.

“I would argue that within the next four decades, having a retirement nest egg of more than $3 million will be considered ‘modest’ given the current rise in our cost of living, and more people will easily breach this hard cap.

“The suggestion that the proposed changes will only impact around 80,000 people is wrong, as it will ultimately impact many more people in future years.
“The introduction of a hard cap also undermines current contribution schemes, including the small business 15-year exemption, the small business retirement exemption and downsizer contributions, all of which encourage people nearing retirement to invest more into their superannuation and become self-sufficient.”

Randeria also aired concerns about indexation as well as the proposal to tax unrealised capital gains, which she says contradicts both current legislation and the “most basic taxation principle” – fairness.

“Currently, there is not a single investment product or structure in Australia where unrealised gains are taxed – including family trusts or corporate entities – so should Australians be concerned that this measure could also be implemented on unrealised gains outside of superannuation?” she wrote.

“I believe this change will result in the sale of assets and the withdrawal of funds from superannuation accounts, as people are forced to pay tax on profits they have not yet seen – and may not ever.”

The auditing executive also detailed certain measures, such as increasing the Goods and Services Tax (GST), she believed would help Australia’s current fiscal deficit and avoid the possibility of Australia’s aging population having to rely further on the Aged Pension, leaving the Government to collect less in taxes.

“Dr Chalmers, I am sure you would agree that it’s in the long-term interests of Australians to contribute as much as they can into their superannuation. Your current proposal doesn’t encourage this and is unfortunately a disincentive to save,” Randeria wrote.

“The Australian superannuation system needs stability, and a moratorium on change, so that people can make long-term plans for a self-sufficient retirement.”