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Taxation support of superannuation in Australia: Its costs, equity and efficacy paper

Published on 01 Jan 87 by Australian Tax Research Foundation

This study assesses the presence and size of concessions under taxation arrangements existing before the mini-budget of 25 May 1983. Its results differ materially from those produced by the Federal Treasury. The author claims that this is due to the fact that the Treasury estimate is based on a single year snapshot, it underestimates the effect of the higher lump sum tax rates on existing members, it assumes that the tax rate paid on investment income should be the same as the marginal rate and it ignores any behavioural modification that would result from changes in the taxation arrangements.

The study concludes with recommendations to improve the efficacy and equity of occupational superannuation. These suggest that the size of future lump sum benefits should be restricted to $60,000 with the balance taken in a pension or annuity, that a tax not exceeding 10 per cent be introduced on investment income and that the limit for contributions by self-employed persons be reviewed and expressed as a percentage of taxable salary.

Author profile

David M KNOX
David Knox, B.A., PhD., F.I.A., F.I.A.A., Associate Professor of Actuarial Studies in the School of Economic and Financial Studies, Macquarie University.


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