Latest news with #RobertBreunig
Daily Mail
13 hours ago
- Business
- Daily Mail
He's one of Australia's leading minds on super - and he's got a sensible idea about changing Albo's laws. But do YOU think Jim Chalmers will budge on his flawed tax grab?
Treasurer Jim Chalmers has declared Labor has a 'mandate' for a sweeping plan to tax superannuation before assets are sold - despite a warning it could amount to a new form of death duties. Labor needs the Greens' support in the Senate to pass its Better Targeted Superannuation Concessions bill that would see a new 15 per cent tax levied on unrealised gains on balances above $3million. The Opposition and superannuation groups are opposed to the idea of taxing assets in a self-managed super fund before they are sold, based on the paper or notional value of holdings. Labor's policy would mark a radical departure from the usual practice of applying the capital gains tax once something has been sold. Now a leading superannuation expert - Professor Robert Breunig, the director of the Australian National University's Tax and Transfer Policy Institute - has argued the government should consider a change to its proposal. Prof Breunig said the government should look into allowing the unrealised gains tax to be paid years later, when someone eventually sells an asset. He likened it to the standard practice of paying undue council rates after a house had been sold. 'If you're going to tax unrealised gains, I think you should be giving people the opportunity to defer paying the tax until they dispose of the property,' he said. 'That would be my preferred policy.' But Chalmers on Wednesday rebuffed a suggestion Labor would revisit the concept of taxing unrealised gains, even though someone inheriting a self-managed super fund could be left with a new tax liability. 'First of all, we're not changing the policies we took to the election,' he told the National Press Club. 'We've got a mandate for that change... What we're looking for here is an opportunity to build on the progress that we've made, including in the economy as you point out. 'We're looking for, not opportunities to go back on the things that we have got a mandate for, we're looking for new ideas.' 'Inheritance' tax accusations Labor's tax on super balances above $3million could effectively amount to an inheritance tax, along with a new tax on franking credits - or tax refunds for owning shares in a company that has already paid company tax. Senator James Paterson, the Opposition's finance spokesman, said the government needed to explain if taxing unrealised gains on super amounted to an inheritance tax by stealth. 'Labor's super tax grab has been on the public record for two years,' he told Daily Mail Australia. 'The Albanese Government should be able to fully explain the implications of their policy, including for people's wills. 'We should not be reliant on independent experts, the media or the Opposition to explain how this policy will work in practice. 'Jim Chalmers must be upfront about how his unrealised capital gains tax interacts with franking credits and inheritance.' A self-managed super fund can be passed on to a dependent or left to someone in a will. Professor Breunig said someone inheriting a self-managed super fund with more than $3million, upon the death of a parent, would effectively be paying a new form of inheritance tax with the 15 per cent tax on unrealised gains. 'Yes, sure it is, but that's true of a lot of our taxes - that's true with council rates,' he told Daily Mail Australia. 'It would be an inheritance tax if you were somehow paying back taxes on it - you inherit the liability.' A self-managed super fund, with a balance above $3million, would be subject to an unrealised gains tax if there was a property in the portfolio, under the government's Division 296 plan. That would be a departure from existing rules allowing someone to avoid paying the capital gains tax on a property they inherited, outside of a super fund. Prof Breunig said Treasury would benefit from being able to tax unrealised gains in a super portfolio, catching out those who left property in a self-managed super fund. 'Currently, we have a subsidy in the system that subsidies people passing out wealth to their children and you're kind of removing that subsidy,' he said. 'That is one of the attractions of the unrealised gains tax.' Future of the tax The Greens want the $3million threshold lowered to $2million but indexed for inflation. Prof Breunig said that would mean applying an unrealised gains tax to accounts typically producing an annual annuity, or guaranteed retirement living income, of $100,000. 'Two million's too low - how much money do people need to have a comfortable retirement?' he said. 'Now you're talking about a lifetime income stream that's more like $100,000, which for a lot of people isn't that much relative to how much they made in their lifetime.' Australian abolished inheritance taxes at a national level in 1979, with all the states getting rid of that tax by 1981. Labor's planned tax doesn't effectively levy a new charge on a superannuation fund balance being transferred to a loved one.
ABC News
28-05-2025
- Business
- ABC News
Tax expert warns if Labor's super tax changes fail to get up, chance for broader reform will be quashed
A leading tax expert has warned that if the federal government can't get its proposed changes to tax on superannuation accounts with balances over $3 million into law, it will destroy any chances of bigger tax reform. "If Labor falters in getting this proposal through, then we have no chance for future further tax reform," Robert Breunig, professor at Australian National University, told The Business. While the vocal outrage over the changes is now reaching a peak, with daily coverage in some publications, the bill was first introduced to parliament in late 2023. It would impose an additional tax rate of 15 per cent on superannuation earnings from the portion of an individual's account balance over $3 million at the end of a financial year. That's in addition to the current 15 per cent tax on concessional super contributions. It has been proposed to come into effect from July 1 but is yet to pass into law. Professor Breunig, the director of the Tax and Transfer Policy Institute at ANU's Crawford School of Public Policy, said the current superannuation tax breaks are "too generous", largely at the top end of the scale. "Super is taxed about right for the average person, but it's under-taxed for people with very large balances," he said. "Superannuation was designed for providing a retirement income for people so that people could have a comfortable retirement," Professor Breunig said, noting that the level of income will look different for different people, but could be in the realm of $100,000 or $200,000, or around 80 per cent of what someone was earning while they were working. "We've got people amassing now tens of millions of dollars in superannuation, which will generate millions of dollars of annual income for them. "That's well beyond what we think is reasonably required for retirement." While the criticism of Labor's policy has been loud in recent weeks, Treasury has said it will only initially affect less than 0.5 per cent of Australians with a super account, or about 80,000 individuals. "Whenever you do tax reform, you create winners and losers. "Even if the winners are a large group of people and the losers are a small group of people, the loser's often very squeaky," Professor Breunig told The Business, describing the debate around the super reform as "very vociferous". One of the arguments raised by opponents of the super tax changes has been the lack of indexation, meaning it will capture a increasing portion of the population as super balances climb with inflation over time. However, the Grattan Institute's program director of housing and economic security, Brendan Coates, has described the idea it will disproportionately affect younger generations as "simply nonsense". "Rather than being the biggest losers from the lack of indexation, younger Australians are the biggest beneficiaries," Dr Coates wrote in The Conversation. "It means more older, wealthier Australians will shoulder some of the burden of budget repair and an ageing population. Otherwise, younger generations would bear this burden alone … Professor Breunig argued much more significant tax reform is needed to address intergenerational inequality in Australia. For example, a switch from stamp duty charged on transfers of homes to a land tax, which would tax the growth in the value of property without discouraging the buying and selling of homes. "I think the other thing we really need to look at is that our system treats very wealthy older individuals as if they are very poor. "We give the age pension to people who have millions of dollars of assets. We treat them as if have no income. We provide age care to people without asking them to contribute to it. "I do think we need to look at putting all of people's assets, including the family home, into the age pension means test and into the means test for age care," Professor Breunig said. "Now, those will not be very popular policies, but they are really the policies that we need to address intergenerational inequity." He described the super changes as a "really important first step" to opening the door to broader reform. One of the other aspects of the policy seized upon by its critics is the fact that it will tax unrealised capital gains — that is, it will levy an annual tax of the increased paper value of an asset — for example, property held in a self-managed super fund that is yet to be sold, so the increase in value is yet to be "realised". On the failed campaign trail, ousted opposition leader Peter Dutton described the move as a "quasi-inheritance tax", while farming groups have said it could create cashflow issues for farmers holding properties in their super funds. Professor Breunig said people were currently putting assets like farms and properties into super funds as a tax shelter. "[Superannuation] wasn't set up to be a business vehicle where you have multiple property holdings or farms, or even actual businesses run through them, and the only reason people are doing that is to avoid tax." He said only taxing actual gains has encouraged people to hold onto assets, giving the example of someone holding multiple properties in an SMSF. He argued a fair approach would be to allow people to opt in to either paying the tax on unrealised gains annually, or accumulate the tax bill until the assets are sold. "That's very much what we do with council rates. If you're a pensioner, you don't have a lot of liquid assets and you get your rates bill, you call the council and you say, 'look, I don't have any money to pay this,' [and] they say, 'that's fine, we'll just keep track of what you owe us, we'll index it by inflation and when your house is transferred or sold, we'll then take the tax liability that you owe.' "So, we could give that to everybody in the system — we could say, 'we're going to tax the unrealised gains, you can pay it now, or we'll keep track of it, and we'll charge you when the property is either transferred or sold.'" The Grattan Institute's Dr Coates noted that one-fifth of all withdrawals from super are currently via bequests and Treasury expects that to grow to one-third of all withdrawals by 2060. "Superannuation in Australia was intended to help fund retirements. Instead, it has become a taxpayer-subsidised inheritance scheme," he wrote. A report from the think tank, released in January, found many retirees are net savers, with their super balances growing for decades after they retire, for fear of outliving their savings. Grattan's modelling showed that Australians who draw down their super at the minimum rate when they retire will leave the equivalent of 65 per cent of their original super balance unspent by the age of 92.
ABC News
27-05-2025
- Business
- ABC News
Australia needs to stop treating rich retirees like they're poor, says leading academic
Skip to main content Director of ANU's Tax and Transfer Policy Institute, Professor Robert Breunig says if the government can't get the super tax proposal into law, it will have no chance for future further tax reform.
