4% worse off under super changes is underestimate: CPAs

Election 2016, Budget 2016, superannuation changes, 4% worse off, accountants, CPA AustraliaAccountants say many more people will be affected by superannuation changes in the 2016 Budget than the Government estimates.

A poll by CPA Australia of members in public practice has found 70% of respondents believe the Government’s superannuation changes will affect over 6% of their clients.

Almost 40% of respondents said over 20% of their clients would be affected. More than a quarter estimate 30% of their clients will be affected.

“The findings are in stark contrast to the Government’s insistence that the changes will only affect a very small percentage of Australians,” said CPA Australia.

CPA Australia chief executive Alex Malley said the poll confirmed the changes have resulted in widespread uncertainty and confusion.

“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,” he said.

“Our members are at the coal face every day advising Australians, young and old, from all socioeconomic groups, about their retirement savings options. They have been inundated with questions from their clients about what these changes will mean to retirement savings.”

The Government has stood by it’s claim that only 4% of Australians will be worse off under the 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,” said Mr Malley.

“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.”

“The ATO has been blindsided to the point of having to issue a special request to all tax agents to try and help it manage the extra workload.”

The ATO has said it is having to manually calculate total non-concessional contributions for taxpayers, following the Budget announcement of a $500,000 lifetime non-concessional contributions cap.

“The Government must listen to the concerns being raised. People need certainty and security to plan for their retirement – the new rules as proposed will deliver neither,” Mr Malley said.

ASFA has estimated that 1,260,000 people will be worse off under the 2016 Budget changes to superannuation.

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5 thoughts on “4% worse off under super changes is underestimate: CPAs”

  1. My Super Fund rang me the other day and told us that we had already exceeded the $500,000 cap. On the basis that our balances are nowhere near $500,000 I thought that they must have miscalculated that cap as most of our Super money came from heavy Salary Sacrificing in the last few years of retirement.

    Then I realised we both took out our balance prior to reaching 65. Then I (foolishly) took out a considerable sum from my Super account and put it into my wife’s Super. I have now also taken out a modest sum from my Super and was about to redeposit it back into my Super.

    Even though most of this cash is from Pre Tax money it now has the status of being Post Tax and the same cash is being counted more than once to reach this cap. On top of that, we withdrawn cash from our Super to pay for our two daughters weddings and cash for a deposit for a unit for them.

    No problem re Super as we had two rural investment properties we were going to sell them and put that cash into our depleted Super funds. But I now can’t do that … Because that would be unfair to others???

    Reluctantly I have to agree that we both have exceeded the $500,00 cap and we have little in Super to show for it!!

    Guess we are lucky to be in the top 4%????

    And we are also lucky this is not retrospective legislation. If it was then where would we now be????

    Funny thing about financial luck, the harder we worked the luckier we got!!!!

    Sorry if I am reporting myself but I get sooo Ahhhhhh when I keep on reading that this is not retrospective legislation and that I must be in the top 4%. I think that I will have to take some more ‘clean skin’ medication.

    Thank You Mr Turnbull.

    1. With respect you must have known , when you were advised to take money out of your super account and pump in straight back in again (whether your own or you wife’s account), that you were taking advantage of an unintended tax rort in the super system (because shuffling money from your right hand to your left hand shouldn’t increase your overall wealth unless taxes are involved).

      Whilst I know it sounds harsh I honestly don’t feel sorry for your predicament – such loopholes needed to be ended at some point in time.

      The present system is unsustainable if it allows a growing proportion of the population to completely remove itself from the taxation system at the very time in their lives they will be drawing more heavily on government services and there are fewer people in the workforce payng taxes to fund such services.

      1. Hi Ben LOL, I am in tears of laughter over your comments. That’s what this post needs is a good laugh from time to time.

        First up I am not seeking your pity and there is no need to feel sorry for me. OK.

        What gets me upset is that my Govt, after the Juliar era, is that I a told the following untruths:

        That I am in the top 4% and that this legislation is not retrospective. If it is not retrospective then why can’t I put more money into my super Accounts????

        It also upsets me that Super is a long term saving plan yet it seems that every budget they change the ground rules!

        I follow all taxation rules known to me to the letter of the law and I am not involved in any taxation rort’s outside of those rules. But you say that shuffling my Super cash has some how or other increased my overall wealth via a tax rort??? As a famous Aussie politician once said, ‘Please explain?’

        $1: I’m betting that you could not tell me how that increased either my wife’s or my over all wealth? (Hint … It didn’t.)

        $2: And I am also betting that you can not point to one dollar that either my wife of myself have not paid buy this shuffle. (Hint: … Not to my knowledge. I’m sure it didn’t …. LOL … I didn’t have a taxable income that year!!! So this was a tax rort???)

        Over to you Ben on those two phantom wrong assertions by you!

        Amongst other things, I don’t feel any guilt in taking cash out of my Super to build up my wife’s Super balance? What is so wrong about that??? How is that so unfair that I am trying to do the right thing by my wife and give her a feeling of greater financial substance???

        Is transferring cash from my Super into my wife’s Super Account a taxation rort and a loop hole that needs to be stopped?

        Ben, please reply as you you crack me up and I need a good laugh!!!

        1. Come on Ben, don’t go all shy. Please tell us all how transferring my Super money into my wife’s Super Account was nothing but a tax rort and how it increased our overall wealth like you have asserted above????

          If you are correct then can you also tell me where do we go to to collect this extra wealth you say we should have achieved as I need this extra cash???? I want to give my wife some more cash to put into her Super Account BUT the Proposed Turnbull Super rules prevent me from doing so!

          Any one else out there who would like to explain the ‘evil’ of transferring husband/male Super Cash into one’s wife’s Super Account to give the ‘little woman’ a feeling of greater financial independence like I have which was so condemned by Ben???

          Such is the level of the Superannuation debate!!!!

          Thank You Mr Turnbull!!!!

  2. One needs to be careful when considering Mr Malley’s comments about the super changes.

    In his 2015 annual report to members Alex Malley was excited about establishing a new service to assist members in expanding into the financial advice industry (http://cpaaustraliaannualreport.realviewdigital.com/#folio=14) which would have inevitably seen an increase in membership numbers (and member fees as well). The proposed LNP super changes, which largely do not come into effect until 1 July 2017, close off a lot of tax-rorts financial advisors were exploited to justify to clients the fees they were earning. The changes are not retrospective when you read the policy detail free from self-interest financial advisors spin (http://budget.gov.au/2016-17/content/glossies/tax_super/downloads/FS-Super/SFS-Combined.pdf).

    I suspect Mr Malley is more concerned about this membership growth avenue being shut down than genuine concern for Australians and the sustainability of the tax system if the present super settings were to be continued into the future.

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