Speaking at the SuperRatings Day of Confrontation in 2009, Peter Costello lamented that one of his biggest regrets during his time in office was the introduction of the contribution surcharge and at the first opportunity, he was glad to remove it. Obviously, the current Government has not learnt from their predecessor's experience and once again, Australians will be the losers. Footage of Peter Costello (Click Here) speaking at the Day of Confrontation clearly shows his contrition at bringing in the tax. It also reinforces the issue of ongoing change, complexity and impacts on member engagement.
The Federal Governments’ introduction of a higher contribution tax effectively amounts to a NEW surcharge, and while defensible on equitable grounds, it will cause complexity and additional cost for all members collectively. Administratively such a surcharge, which involves multiple interactions between funds at the ATO for each single transaction, is a nightmare. Assessments are often years behind the actual event causing widespread confusion for all concerned.
Unfortunately, this was just one of several changes announced as part of the 2013 Federal Budget that are likely to have far reaching repercussions on the superannuation industry and its members. Stability in superannuation is critical if consumer confidence is to increase. Many members already think superannuation is complex and difficult and constant tinkering with superannuation arrangements does nothing to alleviate this nor to help members understand and plan for their retirement adequately.
For an industry already undergoing significant regulatory challenges, including Stronger Super, MySuper, SuperStream, APRA’s new prudential standards, as well as Future of Financial Advice reforms, the announcements will further destabilise the industry and drive up costs for all members.
Please feel free to contact Nathan MacPhee or Kirby Rappell on 02 9247 4711 for additional comment.