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Super tax concessions integral to structural deficit
Altering the current shape of Australia's superannuation tax concessions has been identified as a key element in addressing the nation's structural deficit.
Major consultancy, KPMG has issued a report on solving the structural deficit in which its head of wealth management advisory and former senior union official, Paul Howes, claims superannuation tax concession represent "a classic example of how we have gone astray".
He suggested this was principally because their purpose was never defined.
"We now have no choice but to reel them back in," he said
The major recommendations made by KPMG on super include:
- Reducing annual income threshold at which a 15 per cent tax rate applies for concessional super contributions from $300,000 to a lower threshold;
- Reinstating the Low Income Super Contribution for those earning below $37,000;
- Introducing lifetime concessional and non-concessional caps and abolish annual caps;
- A requirement to divest excessive fund balances with a transitional period of four years to achieve this balance;
- Reduce the capital gains tax discount from one-third to one-quarter; and
- Introduce a rule which crystallises unrealised gains at conversion from accumulation to pension phase.
KPMG tax partner for superannuation, Damian Ryan said equity had to be a cornerstone of any good tax system.
"We believe our super tax proposals, together with changes to the age pension, will raise nearly $5 billion towards the deficit and meet the test of fairness," he said.
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Earlier this month, several Australian superannuation funds fell victim to credential stuffing attacks, which saw a small number of members lose more than $500,000.
Small- to medium-sized funds have become collateral damage in an "imperfect" model for super industry levies, a financial institution has said.
Big business has joined the chorus of opposition against the proposed Division 296 tax.
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