In a submission to the government’s tax discussion paper, a major accounting body has urged the government to consider changing the points of taxation within superannuation.
CPA Australia proposed shifting some of the tax “burden” from the contributions phase to the benefits phase.
The accounting body argued that the most equitable retirement savings system would tax income in the hands of the individual when it is actually received.
“That is, contributions would be tax exempt, fund earnings would be tax exempt or concessionally taxed, and benefits would be taxed,” said the submission.
CPA proposed that Australia should shift its superannuation system to an EET (exempt, exempt, taxed) model.
“The EET model is the most common taxation model used in the majority of OECD countries – Australia is unique in taxing retirement savings at all three points,” the submission stated.
Constant changes to the rules and revenue grabs by governments, such as the repeal of the low-income superannuation contribution and delaying the increase of the superannuation guarantee to 12 per cent, “undermine public confidence in the system which may have negative impacts on Australia’s long term savings”, CPA said.
“It is therefore more important than ever that the policy levers, including taxation, are set appropriately to help ensure superannuation provides adequate retirement savings,” said the submission.
The submission argued that the taxation of superannuation should not be considered in isolation; rather, "there must be a long-term vision and objectives for our retirement savings system", it said.
It argued that developing an effective retirement savings policy is more than just about developing objectives for the superannuation system and enshrining them in legislation.
“It must also encompass the age pension, non-superannuation investments and the family home, employment and aged care,” it said.
SUBSCRIBE TO THE SMSF ADVISER BULLETIN
- 22 Sep 2017ASIC permanently bans SMSF property spruikerBy Miranda Brownlee
- 22 Sep 2017Male SMSF investors ‘bigger risk takers’, says reportBy Staff Reporter
- 22 Sep 2017Lawyer flags subdivision trap with downsizer contributionsBy Miranda Brownlee
- 22 Sep 2017ATO urged to address ‘unknowns’ with LRBA reportingBy Miranda Brownlee
- 21 Sep 2017Lost and unclaimed super climbs to $18 billionBy Lara Bullock
- 21 Sep 2017ATO to release further guidance on reservesBy Miranda Brownlee
- view all
- Male SMSF investors ‘bigger risk takers’, says report
Male SMSF members tend to hold a greater share of assets in higher risk investments including domestic shares and property in comparison to ...read more
- Lawyer flags subdivision trap with downsizer contributions
SMSF trustees planning to make downsizer contributions have been warned that if a property has been subject to a partial sale in the 10 yea...read more
- ATO urged to address ‘unknowns’ with LRBA reporting
The ATO has been asked to provide further clarity around the events based reporting requirements for LRBA repayments, with the new requireme...read more
- view all