The federal government has released a tax discussion paper which confirms tax concessions for higher-income earners may be the subject of subsequent reform.
The discussion paper has called for consultation on the appropriateness of tax arrangements for superannuation in terms of their fairness and complexity, and questioned how these arrangements could be improved.“The flat rate of tax on superannuation contributions means that most high income people receive a larger tax concession, relative to their marginal tax rate, than low income people,” the paper noted.“The same is true during the accumulation phase and even more so during the retirement phase when there is no tax on earnings.”Speaking to ifa sister title SMSF Adviser, Peter Burgess, head of policy, technical and educational services for AMP’s SMSF business, said while it is still early days in the tax reform process, there is “no doubt” the self-managed super sector will be pulled into the discussion.
However, he reiterated that a “logical first step” is to identify the true cost of superannuation tax concessions, given that Treasury has publicly acknowledged the limitations in its estimates.
Any tax reform debate involving super concessions should appropriately consider factors such as the savings the government makes on the age pension with these concessions in place, Mr Burgess said.
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