Chartered Accountants Australia and New Zealand and CPA Australia welcome the opportunity to provide feedback on the inquiry in to Treasury Laws Amendment (Better Targeted Superannuation Concessions and Other Measures) Bill 2023 and the related Superannuation (Better Targeted Superannuation Concessions) Imposition Bill 2023.

On balance CA ANZ does not support the Better Targeted Superannuation Concession policy contained in the Treasury Laws Amendment (Better Targeted Superannuation Concessions and Other Measures) Bill 2023 and the related Superannuation (Better Targeted Superannuation Concessions) Imposition Bill 2023 for many reasons including:

• The complex design features of the policy which will add considerable administration costs for the whole superannuation system; it is our view that the cost assumptions contained in the explanatory memorandum considerably under-estimates the expenses incurred by individuals, super funds, accountants, lawyers, auditors and others involved in running all types of superannuation funds.
• It alters the tax mix for those already retired and those saving for retirement when certainty is essential; otherwise it is inevitable that many will be discouraged from making adequate contributions towards their retirement
• We question how much net revenue will be raised from this measure
• We believe there may be better solutions available to the government
• The current design of the policy taxes unrealised gains; our submission contains several examples which shows this is likely to cause many funds cash flow concerns
• The current policy design contains a mechanism that will see capital losses carried forward – 70 percent of our members in the taxation and superannuation sector told us that they did not agree with this policy; as a result of this finding we suggest an alternative solution.

Our conclusion in relation to this new tax measure applies even though we are yet to see the associated regulations which will contain very important operational issues including how this tax measure will apply to members with a defined benefit interest.

However if the Senate Economics Legislation Committee intends to recommend that the Bill should be passed then it should also recommend important amendments to it.

Our preferred amendment, if the Bills subject to this inquiry are to be passed, is that the taxing point for the Better Targeted Superannuation Concession should occur only when benefit payments are made – this will dramatically reduce administration costs for this measure for the Australian Taxation Office, individuals and superannuation funds. It also removes the need to tax unrealised capital gains and keep track of carried forward capital losses.