Generous tax concessions for Australia’s highest income earners are undermining popular support for the nation's retirement system, argues the Association of Superannuation Funds of Australia (ASFA).
According to an ASFA report entitled Superannuation and high account balances, the government needs to enact policy that creates a more equitable tax environment for superannuation.
ASFA's director of research, Ross Clare, said: “Although the proportion of members with high balances is low, the value of funds involved is large and therefore we should be doing something about it on both revenue and equity grounds.
“Applying the same tax framework to very large balances as that which applies to lower balances undermines support for superannuation, as few believe they will ever achieve such heights,” Mr Clare said.
Only 0.5 per cent of Australians hold superannuation accounts with balances above $2.5 million, with approximately 210,000 people holding accounts above $1 million, ASFA said.
Nonetheless, the report argued that the concessions available to such account holders must be reviewed.
“While the number of people with very high account balances is relatively low, the amount of benefits they receive in tax concessions are substantial and should be adjusted,” the association said.
ASFA noted that Australia’s changing demographics – which are an increasing challenge for governments – warrant the introduction of policies that “generate additional revenue”.
“An obvious starting point is the accumulation and tax treatment of very high superannuation account balances,” the association said.
“High income earners benefit more from concessions on earnings as they tend to have higher account balances, and concessions in the tax-free pension phase as they tend to generate higher income streams from these high balances.
“These are therefore areas where changes will theoretically impact high income earners more so than low income earners,” ASFA said.
Public debate on the equity and quantum of concessions has intensified recently following the release of the government’s preliminary tax discussion paper – Rethink: Better tax system, better Australia.
Most of Australia’s largest superannuation funds do not support the majority of shareholder proposals on environmental, social and governa...
MLC Life Insurance has been appointed as Maritime Super’s new group insurer following an extensive tender process. ...
The Australian Institute of Superannuation Trustees have called on the incoming government to develop an online tool to help Australians mak...