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A Critical Analysis of the Proposed Changes to Superannuation Taxation

Published on 01 Sep 06 by "AUSTRALIAN TAX FORUM" JOURNAL ARTICLE

This paper discusses four issues in respect of the changes that are to be made to the way that superannuation is to be taxed.

First, the changes dilute the connection between the tax concessions given for saving for retirement and the requirement that the accumulated funds be used for that purpose.

Secondly, the rules that limit the maximum amount that can be accumulated in the tax preferred environment of a superannuation fund are being removed and replaced with rules restricting contributions. To the extent that the former rules introduced equity between taxpayers, this aspect is absent in the new limitations.

Thirdly, claims made about the simplification effect of the new rules are challenged.

Finally, the taxation of employer termination payments will no longer be integrated with superannuation fund payments. This produces a harsher result and alternative treatment is suggested.

Author profile:

Gordon MACKENZIE

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