The easiest way to reduce these large Superfund holdings is to increase the minimum drawdown amount for holdings above $3 million. ie raise the current minimum of 5% to 15% for 65 - 74, 17% for 75-79 yrs, 20% for 80- 84 yrs, 25% for 85 -89 yrs and 30% for those above 90yrs
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Age
Standard Minimum Percentage Factor
4
Below Age 65
4%
5
65 - 74
5%
6
75 - 79
6%
7
80 - 84
7%
8
85 - 89
9%
9
90 - 94
11%
10
Age 95 and above
14%
This would be far easier to administer and would reduce balances back to $3 million even those with $50 million balances.
ie $50 million at 65 yrs would be down to under $3 million by 80 years old, if they reach 100 yrs then only $80,000 would be left.
However the reason why Labor wants to introduce an un-realized tax is to raise more tax money.
When Labor setup the Superannuation scheme originally, they wanted to tax it at every point.
ie 1)money that is put into the fund via wages or extra contributions,
2) tax it while its earning in accumulation stage.
3) Even when at the Pension stage the amount above the Pension cap limit of $2 million must be kept in accumulation account which is still taxed.
Labor wanted tax paid during the whole Superannuation process and now just want even more tax and they're not prepared to wait until the asset is sold.
