Superannuation Tax Reform: Sensible Changes for a Fairer System
A Discussion Paper that sets out a vision for meaningful tax reform that aims to make super simpler to invest, easier to spend and fairer with bequests.
In Superannuation Tax Reform: Sensible Changes for a Fairer System, actuaries Richard Dunn, Michael Rice, Jennifer Shaw and Alun Stevens set out their vision for meaningful tax reform that aims to make super simpler to invest, easier to spend and fairer with bequests.
In brief:
- While the Australian superannuation system delivers considerable benefits, including a financially secure retirement for an increasing number of retirees, it is complex, and contains inequities and anomalies. It is also supported by generous tax concessions.
- The proposed reforms are:
- apply a uniform tax of around 10% on fund earnings in the accumulation and retirement phases;
- allow retirement benefits to remain tax exempt except for large withdrawals and make all smaller super bequests tax exempt; and
- treat all contributions into super the same once made.
- All tax reforms produce winners and losers. Consequently, any changes should be announced and implemented sensitively with sufficient transition, including consideration of compensation for those adversely impacted.
The Institute acknowledges there are many alternative views on superannuation tax reform. This Discussion Paper is deliberately intended to stimulate and facilitate debate. Wider debate is an essential part of developing the case for, and path to, meaningful tax reform being achieved.
We have a superannuation system that’s working, but it’s one of the most complex in the world. Our proposals make super simpler for consumers and funds, while improving equity across the system. Further, the reforms encourage people to spend their super by reducing the attraction of using super to accumulate tax-free bequests.
— Richard Dunn, actuary and co-author
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