Powered by MOMENTUM MEDIA
accountants daily logo

Auditor rallies younger members to fight against $3m super tax

Super

Younger super members have the most to lose from the proposed $3 million super balance tax and should take notice, says a prominent SMSF auditor.

By Miranda Brownlee 10 minute read

Reliance Auditing Services managing director Naz Randeria said it's been almost 12 months since Labor announced its Division 296 tax that will tax earnings on balances above $3 million by an additional 15 per cent on top of the regular earnings tax imposed.

“I think too many people have dismissed the measures as only having an impact on the so-called rich,” said Ms Randeria.

“In reality it’s the younger generation who need to be taking notice, because they’re the ones with the most to lose.”

Ms Randeria has been using TikTok videos to try and inform younger people about the proposed policy.

The TikToks explain the proposed changes, which will double the tax rate for earnings on super balances above $3 million and tax unrealised capital gains, highlighting Ms Randeria’s concerns.

“These measures will fundamentally change what is one of the best superannuation systems in the world, and it’s the current generation of young workers who will wear the burden,” said Ms Randeria.

“By doubling the tax rate and introducing an entirely new concept of taxing unrealised gains, it creates a disincentive to save and will see more people need to rely on the Age Pension in their retirement.

“That’s a significant cost burden for the future generation of taxpayers to have to fund.”

Ms Randeria is hoping that by taking to TikTok, she can simplify the information and make more people realise that they should care about what happens to their money.

There are several reasons why the younger generation should oppose the changes, she said, including the fact the $3 million threshold is not indexed.

“The $3 million figure fails to take into account future inflation, wage rises, regional disparity, the increased cost-of-living and Australians increased life expectancy, all of which will result in a greater number of people breaching the cap and being penalised in future, through no fault of their own,” she said.

“In the same way that $1 million was considered a significant sum of money in previous decades, having a retirement nest egg of more than $3 million is likely to be considered modest by the time those currently in their 20s are retiring, some 40 years from now.”

The policy also creates uncertainty that the goalposts won’t shift again in the future, she said.

Ms Randeria is also highly critical of the proposed model for the new tax, which taxes unrealised gains.

“There is currently not a single investment product or structure in Australia where unrealised gains are taxed – including family trusts or corporate entities. Introducing it into superannuation sets a dangerous precedent for expansion in future, especially if the tax fails to generate estimated revenue,” she said.

The fact there is $16 billion in lost and unclaimed superannuation in Australia highlights that too many people aren’t engaged with their super, are not checking statements, are not paying attention to where the money is, and that needs to change, she stated.

“It’s your money sitting in the account, you should absolutely care what happens to it. Particularly for the younger generation who still have another 40 years of working life and super accumulation ahead of them,” she said.

“That’s why it’s so important that people understand what changing the superannuation system will mean for their future.”

You need to be a member to post comments. Become a member for free today!

You are not authorised to post comments.

Comments will undergo moderation before they get published.