Measuring the concessions as tax expenditure using a comprehensive income benchmark is “misleading and biased” against concessions, said SPAA chief executive officer Andrea Slattery.
“[This is because] any derivation from income being taxed at a taxpayer’s marginal tax rate is regarded as a cost to government revenue,” she said.
Ms Slattery added that while the current methodology is “theoretically correct” under a comprehensive income benchmark, it doesn’t include factors such as future government savings from reduced spending on the age pension.
“SPAA believes this skews the debate regarding the level of concessions and the appropriateness of concessional taxation of superannuation contributions as an incentive for people to save for their retirement,” she said.
The association recommends that an expenditure tax benchmark be used to estimate the cost of the superannuation tax concessions.
“It would be more appropriate for estimating tax concessions as an expenditure tax benchmark [and] has a more appropriate focus on the provision and taxation of superannuation benefits rather than the tax forgone for the concessions,” Ms Slattery said.
SPAA’s director of technical and professional standards, Graeme Colley, told SMSF Adviser the association is concerned about the adequacy of the population’s superannuation savings.
“[We] just don’t think the incentives there are good enough to enable people to have enough for retirement,” Mr Colley said.
SPAA regularly consults with the government and the Australian Taxation Office to discuss policy and the effect it will have on Australians, he added.
“We represent a third of the money within superannuation and the current government recognises that and consults with us quite regularly,” he said.
Good grief! Did she really say this?
Ms Slattery added that while the current methodology is theoretically correct under a comprehensive income benchmark..
This is quite wrong. It is so not correct it is not funny. I was involved in the first tax expenditures statement in the 1980s. The true theoretically correct benchmark would be lifetime income averaging with unlimited income sharing between spouses and children. Superannuation contributions are to labour income what depreciation is to plant and equipment. Nobel prize winner William Vickrey understood this in the 1940s. So did John Stuart Mill.
The Treasury concept (based on the work of Stanley Surrey of Harvard Law School) is open to attack on so many fronts it is hard to know where to start!
Dr Terry Dwyer
Dwyer Lawyers
http://www.dwyerlawyers.com.au