The Actuaries Institute has recommended a superannuation tax reform package that would add a uniform tax on earnings across Australian accumulation and retirement accounts.
The institute also supports a tax on high withdrawals in retirement, simplifying bequest tax rules, and uniform taxes across contributions once invested in a superannuation fund, it said in a discussion paper today.
“We have a superannuation system that’s working, but it’s one of the most complex in the world,” said actuary Richard Dunn, the paper’s co-author.
“Our proposals make super simpler for consumers and funds, while improving equity across the system. Further, the reforms encourage people to spend their super by reducing the attraction of using super to accumulate tax-free bequests.”
According to the Actuaries Institute, these changes would eventually save around A$1 billion in fund operational costs per year.
The paper recommends a uniform tax of 10% on superannuation earnings, rather than the existing 15% tax paid during accumulation and no tax paid by retirees.
The institute proposes a tax on retirees withdrawing high amounts from their superannuation funds, such as lump sums above $250,000 or pension benefits above $150,000 per annum.
The 17% tax on bequests would be applied at age 67 instead of age 60, under the Actuaries Institute’s reforms.
The Actuaries Institute also supports a single tax treatment for concessional and non-concessional contributions once invested in a super fund.