The Institute of Chartered Accountants in Australia (ICAA) has claimed that the Income Tax Assessment Act discriminates against people who are self-employed in relation to their superannuation.
The ICAA’s superannuation spokeswoman, Susan Orchard said that this discrimination occurs because the Income Tax Assessment Act does not define the self-employed, resulting in different savings and tax outcomes for those Australians who are self-employed.
She said this meant there were three main areas of superannuation in which the self-employed were disadvantaged — super co-contributions, taxation of invalidity payments and eligible service periods.
“This makes self-employed people potentially thousands of dollars worse off,” Orchard said.
The ICAA has used a submission to the Treasury to call on the Government to review the taxation system to make it fairer and more equitable.
The submission also calls on the Government to rectify the inequity between married couples and singles in retirement.
Orchard said that taxation reform is overdue in circumstances where taxation of superannuation occurs both within a fund and upon exit and, in addition, it is also complex and difficult to understand.
“Complex taxation arrangements make it difficult to make economic decisions about superannuation without assistance,” she said. “Often individuals fail to see the advantage of taking an income stream versus lump sum upon retirement which can have adverse financial outcomes, particularly for those who were middle income earners when employed.”
