ACOSS welcomes today’s announcement that a higher tax rate of 30 per cent will apply to the investment income of superannuation funds valued at over $3 million.
“ACOSS welcomes this modest first step to clear up the waste and inequity in tax breaks for superannuation,” ACOSS CEO Dr Cassandra Goldie said today.
“With one in eight people in Australia living in poverty and many people under financial pressure, the Government is right to reduce unfair tax breaks for the wealthiest in our society.
“$3 million is far more than anyone needs to fund a decent retirement, which should be the goal of superannuation – not tax avoidance or bequests for adult children.
“We also welcome the Treasurer’s move to legislate an objective for superannuation to make sure the system is equitable and sustainable.
“For a fair and inclusive society we must make the right choices about who needs more government help and who needs less. Reforming unfair super tax breaks is a good place to start.”
ACOSS believes more must be done to make the tax treatment of superannuation fit for purpose including:
- Extend the 15 per cent tax on the investment income of super funds to the retirement phase. Not taxing the retirement phase is not sustainable when governments are already struggling with the costs of quality health and aged care.
- Replace all tax breaks for contributions with a simpler and fairer annual refundable rebate.
According to the just-released Tax Expenditure Statement:
- 55% of the value of $25 billion in tax breaks for contributions goes to the top 20% of individuals by income, and 59% overall goes to men.
- 56% of the value of $23 billion in tax breaks for superannuation fund investment income goes to the top 20% by income, and 61% overall goes to men.
- Superannuation tax concessions cost the Budget $52 billion a year, approaching the cost of the Age Pension ($55 billion)
- 84% of people over 64 years pay no income tax, though many can afford to do so
- Once a person retires and their super fund pays them a superannuation pension, in most cases the rate of tax on the fund’s investment income (interest, dividends and capital gains) falls from 15% to zero. This anomaly is widely exploited for tax avoidance purposes.