The growth in the cost of the tax breaks associated with Australia’s superannuation savings has been “truly phenomenal” and reform may be inevitable, according to one national accountancy network.
The Turnbull government is now looking closely at how to reform Australia’s tax system, and is even considering “radical” proposals at present, according to H&R Block’s director of tax communications, Mark Chapman.
The argument for reform of the superannuation system is based on the hypothesis that many of the wealthiest Australians are now using superannuation as “far more than just a way to save for their retirement”, Mr Chapman said.
“It’s become a de-facto tax avoidance scheme whereby huge sums are put into superannuation purely to save income tax, the result being that superannuation balances are being generated which are far larger than any reasonable person could ever need to fund a comfortable retirement,” he said.
Many of the superannuation lobby groups, as well as groups such as National Seniors, are beginning to believe change is “inevitable”, Mr Chapman said.
“Those hostile to change argue that tinkering with the tax concessions associated with a program as long-term as superannuation is unfair, akin to changing the rules half way through a game of football. It could, they argue, prove to be a disincentive to future retirement saving,” he said.
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