Resource Super Profits Tax may be detrimental to the after tax earnings of superannuation funds, says DeloitteDOWNLOAD
Sunday 2 May 2010: “The introduction of the Resource Super Profits Tax (RSPT) may detrimentally affect the after tax earnings of superannuation funds investing in the established resource sector,” said Deloitte Superannuation Tax partner Noelle Kelleher.
“On the other hand the proposed tax could support the emerging resources entities particularly in greenfield projects.”
The RSPT will be introduced on 1 July 2012 at a rate of 40% on profits made from the exploitation of Australia’s non-renewable resources.
“Although not a direct tax on superannuation funds, superannuation funds will be affected from an after-tax investment earnings perspective,” Kelleher said.
“The Government’s superannuation specific measures announced in response to the Henry Tax Review were aimed at increasing future retirement incomes. However, the RSPT represents a real cost to the investors, and could result in lower retirement income outcomes where funds invest in the resource sector,” she said.
“In our view the introduction of the RSPT may have a significant after-tax effect on superannuation earnings on various fronts. The resource companies may have reduced profits to pay out in dividends and the RSPT is not a creditable tax for imputation offset purposes. Further, if it decreases the profits of the resource companies then the share price may reflect this. This will reduce the net asset value of superannuation funds.
“Superannuation funds are required to diversify their investment risks, but superannuation funds may be reluctant to channel capital into the resource sector if they do not get sufficient after-tax returns given the associated risks and likely economic outcomes,” said Kelleher.