ASFA urges caution on super tax changes

While not dismissing or criticising the Federal Opposition's proposed changes to superannuation tax concessions for high balance account holders, the Association of Superannuation Funds of Australia (ASFA) has urged that they be viewed in the context of other, non-super investments.

Further ASFA has cautioned against assuming that people with high incomes hold high super account balances.

In a formal statement reacting to the release of the Labor Party policy statement, ASFA chief executive, Pauline Vamos, said changes to the superannuation system needed to be considered as part of the broader taxation framework .

"Any proposal needs to be assessed against the principles of adequacy of retirement income, equity, simplicity and fiscal sustainability," she said. "It is also important that any changes maintain confidence in the system."

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"Tax concessions in superannuation need to be viewed in the context of other investments and the impact that the change will have on individuals' motivation to save for their retirement," Vamos said. "It is important that the community be brought on board to support any changes to the superannuation and taxation systems."

She said this was why ASFA had been contributing to the national debate on tax reform and had called for tax concessions to be reduced for those on very high superannuation balances, that is, those above $2.5 million.

"Those with very high balances benefit from the low earnings tax in accumulation and no tax in retirement. However those on high incomes do not necessarily have high balances - particularly women - and are playing catch up. Just because you have a high income today does not automatically mean you have enough super," Vamos said.