In huge news, the government has come out last night and declared they will not impose taxes that would hit people drawing down on super.
Scott Morrison was captured by Fairfax media saying changes to superannuation tax concessions were possible in the upcoming tax review but indicated that the government would not impose taxes that would hit people drawing down on super.
It comes as Treasurer Scott Morrison has leaked a wider piece of suggested policy overnight that the government will very likely move forward with a plan to adopt a universal cap on tax deductions limiting how much people can claim against their income on their tax return. The proposal is expected to put 5 or 6 billion back into the government’s coffers which they expect will be returned to taxpayers through income tax cuts. Sounds like they want families to get news that there will be cash back in their pockets before the next election. But what’s in it for you the Baby Boomer and beyond?
Let me stop and break this out. The over 55s now make up nearly 25 percent of the population in Australia, and this move will have an ulterior impact or two that many can’t see for the political haze. Firstly, simplification of how people can charge tax deductions may not have much impact on you at all because you may not have many years of direct earning in employment left; but nor might the income tax cuts they say could flow from the increase in revenue as you are not in a job to enjoy them.
Many post-retirement boomers, structured well, pay very little income tax as most are either living off a pension supplemented by superannuation, or living off superannuation which holds their assets in a low tax domain. So the fear of changes to income tax structures on superannuation in drawdown phase is something everyone is watching for.
It’s clear the Government would prefer to drop a GST increase and an array of tax cuts, also aimed at middle Australia but political circumstances will probably not allow that to happen in the short term. Boomers are probably relieved at that as a GST would certainly see the cost of living rise with little chance of a rise in pensions at the same time.
Are you pleased to hear the government does not plan to grab at the incomes of retirees in this tax review? Does this alleviate some of your concerns?