Treasurer Scott Morrison has said the government will need to make some difficult choices as it evaluates the purpose and effectiveness of tax concessions in superannuation.
Speaking to delegates at the SMSF Association's national conference in Adelaide, Mr Morrison said the government will soon finalise its views on tax arrangements in super.
He said it is clear that some "hard decisions" lie ahead for the government when addressing the targeting of tax concessions.
"The task is to weigh up the value of superannuation's tax concessions against other uses for how that revenue might be applied. For instance, should we direct tax concessions to superannuation in the same way that we're doing it now or should we instead put more money towards reducing income tax or company tax?" Mr Morrison said.
"[Another] major issue that is being flagged is the distribution of concessions across different income groups. When you look at the average balances by taxable income and age, you can clearly see how a large proportion of concessions can flow to high-income earners. This is a fact.
"A substantial proportion of the superannuation tax concessions by value do go to the highest income earners. This applies in relation to both contributions and earnings concessions. And we know from the Murray Review that very little of what the government puts towards super concessions goes to the bottom 20 per cent of earners."
Mr Morrison reiterated that the government is contemplating whether the current tax concessions for super do in fact relieve pressure on the age pension.
"It's great that people are saving for their own retirement. They do it in super and many other forms. But I believe they raise questions about the purpose of the concessions... certainly they boost retirement incomes to the extent that their absence would result in lower balances, arguably," Mr Morrison said.
"However, what is less clear is where the concessions for high-income earners increase savings behaviour or relieve pressure on the age pension."
SUBSCRIBE TO THE IFA DAILY BULLETIN
- 19 Jun 2018Consultant calls for ‘restricted’ product adviceBy Tim Stewart
- 19 Jun 2018Fitzpatricks Group names three new execsBy Reporter
- 19 Jun 2018Former NAB, ASIC exec approaches Dover advisersBy Aleks Vickovich
- 19 Jun 2018CBA blocks access to Dover advisersBy Aleks Vickovich
- 19 Jun 2018ANZ launches adviser wellness portalBy Reporter
- 18 Jun 2018IOOF Alliances launches service for self-licensed advisersBy Reporter
- view all