Penalties should be directed at income stream providers

The Federal Government has been told that blame for breaching the rules around superannuation income streams should be carried by the income stream provider, rather than the superannuant.

Tax and Super Australia, previously known as Tax Payers Australia, has used its pre-Budget submission to the Treasury to argue for legislative amendments which would effectively place additional responsibility on income stream product providers.

The submission calls on the Government to amend the relevant sections of the Income Tax Assessment Act to give effect to the change.

“Penalties for a failure by the superannuation income stream provider to comply with the commutation authority should be directed to the provider and not the superannuant,” the submission said.

It pointed out that the new section of the Act required a superannuation income stream provider to comply with a commutation authority but that the penalty for non-compliance was then levied on the superannuant.

“The penalty should instead be directed to the superannuation income stream provider,” the submission said.