Accountant: Most wealthy super to remain tax free

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By Leith van Onselen

As the army of super rent-seekers continue to moan about having to pay a token amount of tax under the Coalition’s announced super reforms, an accountant has advised that the lion’s share of retirement accounts would still remain tax free. From ABC News:

The Federal Government’s budget changes to superannuation have shaken some of its key support bases amongst the elderly and better-off, who are worried it will hurt their plans for a comfortable retirement…

[However] Jonathan Philpot from accounting firm HLB Mann Judd told the ABC’s PM program that super is still the most tax-effective form of retirement saving.

…given Australia’s dividend imputation system that gives shareholders franking credits for tax that companies have paid, Mr Philpot said the majority of super accounts still will not be paying any tax.

“I’d be surprised if all of a sudden now people’s superannuation accounts actually had to start paying annual tax sums back to the Tax Office,” he said.

“I think it will be just more the case of the refund that was usually received by superannuation accounts with the excess franking credits will just be reduced going forward”.

…whichever party or coalition ends up forming government, he said super remains the most tax-effective way for most people to hold their savings, while alternatives such as negatively geared property investments do not make sense for most retirees.

“Superannuation will no longer be as advantageous as what it was before these changes were announced, but I’m very strong on saying superannuation still remains the best structure for holding people’s retirement wealth,” he concluded.

“It’s still going to be the lowest tax structure.”

In other words, stop your complaining.

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About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.