The Treasurer Scott Morrison has said the small business superannuation tax concessions are unaffected by the Budget, in an lively debate with Shadow Treasurer Chris Bowen.
“Better targeting generous superannuation concessions will ensure we focus on sustainably supporting those Australians at risk of being dependent on a full or part age pension in their retirement,” the Treasurer told the National Press Club.
“Existing exemptions of up to $1.395 million in additional contributions for small business on the sale of their businesses assets or their businesses as they move into retirement are unaffected by the changes we announced in the Budget.”
Update: Assistant Treasurer Kelly O’Dwyer has said the $500,000 retirement exemption will also remain in place.
The Treasurer later said the Government has used some of the $6 billion raised from the Budget changes to superannuation to fund measures such as the Low Income Superannuation Tax Offset (LISTO), changes to spouse contributions and removing the 10% rule.
The Treasurer said these changes came out of the, cut short, Tax White Paper process.
“The Treasurer claiming that the budget policy is a result of the white paper process is as heroic as his budget assumptions. There was no white paper process. How the Treasurer can sit there and claim that with a straight face is laughable,” replied Chris Bowen.
Mr Bowen said the Treasurer had released a “carbon copy” of the Labor superannuation policy in the 2016 Budget, despite attacking those policies when they were announced.
“On the retirement phase in particular, you know that our $1.6 million cap ensures that every single cent in a retirement phase superannuation account has no tax on its earnings. You know that’s the case. Under your policy the retirement phase superannuation account will attract tax on its earnings. Now that is a key difference between our policies,” said Morrison.
“I think you will find the superannuation sector prefers our policy to yours.” replied Bowen.
“I don’t think they do,” said Morrison.
“I think you may want to take some advice on that,” said Bowen.
“They said your proposal is unworkable,” retorted the Treasurer.
It should be noted that the Treasurer is correct that the Coalition policy doesn’t tax pension phase income in superannuation funds. However it does force assets back into accumulation phase – where the income will be taxed at the same rate as applies under the ALP policy.