Tangle of sex discrimination looms for new super tax

As the Treasury faces significant pressure from the city’s upper classes against the new tax, former High Court judge Susan Crennan AC KC has entered the debate by suggesting the plan would impose higher taxes. raised to women than to men in similar circumstances.

Crennan, who returned to the practice of law after retiring as a High Court judge, introduced another headache as the government tried to push through a plan to introduce a new 15 per cent tax. cent on super income for balances over $3 million.

In order to integrate defined benefit (DB) pensions into the new super tax net, the government must find a formula that creates a tax regime equivalent to that of conventional pensions.

The current proposal is to apply calculations of the value of a DB pension already used in family law when DB pensions are included in divorce agreements.

But bribes from defined benefit pension plan players are increasing. John Pauley of ACPSRO – Australian Council of Public Sector Retiree Organizations – recently told The Australian: “We are easy targets here, we don’t have the ability to move money around – we are treated as if defined benefits were some kind of gift. , but we want to make it clear that we are taxpayers and have never gotten the tax benefits of others in the system.”

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At the same time, the Australian Judicial Officers’ Association suggested the implications of reducing judges’ pensions could “erode the perceived independence of the judiciary”.

But Crennan added a new – and potentially powerful – argument to the issue.

According to Crennan, “the practical result is that many female judges in the Commonwealth system have had unusually long judicial careers. Based on the actuarial assessments provided for in the draft regulations, the cohort of female judges referred to will bear a higher Div 296 tax burden than their male colleagues in similar circumstances.

Essentially, the discrimination argument emphasizes that DB pensions and their expected tax rates will be based on actuarial valuations that predict that women will live longer than men. Therefore, under the plan, they will pay more in permanent taxes whether or not they live according to actuarial assumptions.

This argument was taken up in a submission to the Senate by the accountants’ body, CAANZ. He suggests that the plan based on the value of retirement capital risks being discriminatory.

In its submission, CAANZ says: “It may be possible for two people – one woman and the other man – in very similar circumstances to have different tax obligations due to their respective genders – in such cases the woman will pay more taxes. »

CAANZ superannuation manager Tony Negline said: “The plan is unacceptable and it needs to be restructured. »

The argument of sexual discrimination adds to a series of arguments currently accumulating over the tax, which is currently before Parliament and which the government hopes can be applied effectively from the new financial year in order to that it can be collected from the start date of July 2025.

Alongside resistance from senior civil servants, there are concerns in the professional services sector that the new tax based on unrealized grain (or paper gains) will have a range of unintended consequences. The lack of indexation of the $3 million threshold following the latest rebound in inflation also raises concerns.

Defined benefit plans were abandoned in 2004 and now mainly concern civil servants who are retired or close to retirement.

Pensions have become very popular since the retiree receives a fixed payment due each year, regardless of the fortunes of the investment markets.

The tax requirements on DB payments are complex. However, many former civil servants benefit from capped, tax-free DB income of up to $118,750 per year.

Crennan was not available for comment on the matter.