Super tax breaks raises costs and key operational risks

Posted by Anton Murray Consulting on 2 Mar, 2023

Investment Magazine

The Federal government’s plan to double the tax rates of the earnings of Australians with superannuation accounts of over $3 million will raise key operational issues including the calculation of unit pricing, leading to increased cost to members. Under the proposal changes, future earnings above the $3 million threshold during the accumulation phase will be taxed at 30 per cent from FY26. However, funds below the $3 million threshold will continue to be taxed at a concessional 15 per cent.

The proposed changes will affect around 80,000 people and generate around $2 billion in tax revenue. “The proposed changes will add more complexity for member administration and also for the Australian Taxation Office as this is a new way to apply tax,” David Braga, principal at consultant Jefferson & Shea Group who advises on custody matters tells Investment Magazine. “This will lead to higher costs to initially upgrade the system and then ongoing maintenance for the upgrade.” 

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