The collective sigh of relief from anyone connected with superannuation was deafening this week when Treasurer Wayne Swan delivered the midyear budget review. Fears had been mounting that the Gillard government would balance the budget by increasing taxes on superannuation. In the final analysis, the midyear review was a mixture of pain and gain.
The pain is being borne by those couples wanting to have children, due to a reduction in the baby bonus big companies that will now have to pay their income tax instalments monthly instead of quarterly anyone with private health insurance due to the rebate being tied to CPI increases and SMSF members suffering a 29.5 per cent increase in the levy they pay to the ATO.
From the 2013-14 financial year onwards the levy paid by SMSFs will increase to $259 a year. This will be the fourth increase in four years. The first increase in this levy occurred with the introduction of "simple super" when it went from $45 to $150. It was then increased in the 2011 federal budget from $150 to $180, and then increased in this year's budget.
In the press release issued by Financial Services and Superannuation Minister Bill Shorten, the increase in the levy was heralded as a reform. Adding insult to injury, the press release contained either a typing error or another indication of how far removed from reality Canberra is. The latest increase was shown as going from $191 to $259. There has never been a $191 levy. In this year's budget the levy was increased from $180 to $200.
In the gain area, the supervisory levy paid by large superannuation funds regulated by APRA will fall 10.4 per cent for the 2013-14 year. This change indicates which sector of the superannuation industry has more influence with the Gillard government, and it certainly isn't self-managed super funds.
This fact is borne out with another press release issued by Shorten separate to the main release covering the midyear budget measures. In this press release, Shorten said $10 million would be spent over the next three years to fund yet another lobbying group called the Superannuation Consumer Centre.
This centre is allegedly required because, in the Gillard government's view, there is not currently an organisation that has a primary focus on superannuation policy, research and advocacy. If you believe the press release, there is also no organisation that exists to promote a member-driven approach within superannuation.
The sincerity of the Gillard government in setting up this new taxpayer-funded organisation must be in question as there is already an organisation that has this focus. This is the Self-Managed Professionals Association of Australia. This organisation has a dedicated focus on policy, research and advocacy relating to superannuation.
In addition, as SMSFs are run by the members of the fund, you could not get an organisation more driven by member issues related to superannuation.
The other gain that came from the midyear budget related to a Tax Office practice that was effectively a death tax on super fund members. The government has announced that it will amend the law so that when a member of a superannuation fund dies, and they are receiving a pension, no tax will be payable in the course of winding up and paying out the member's benefits.
If the budgetary situation further worsens between now and next May, it will be anyone's guess as to what further pain is to come, and it hopefully won't be more changes to superannuation.