Business News

Tax concession amount erroneous

Superannuation lobby group the SMSF Owners Alliance has questioned Treasury’s retirement savings tax concession figure of $32 billion, which was currently being used as justification to make changes to the system.

“It was taken from a misinterpretation of Treasury’s tax expenditure statement. They were basically adding the cost of the contribution concession to the cost of the savings in tax on earnings within super without recognising there was some double counting in there,” SMSF Owners Alliance director Barry McWilliams said.

“Treasury conceded this to us and in their tax expenditure statement they included a footnote saying you really shouldn’t add these two figures together, but never did anything to disabuse the public of this $32 billion cost, which was obviously very useful to a lot of people.

“Recently there has been a breakthrough in that one of the senior Treasury officials has conceded that the $32 billion figure isn’t something the government could save by abandoning all of those tax concessions in superannuation.”

McWilliams said it highlighted the importance of basing any discussion on the current tax concessions on fact and not a set of contrived numbers.
Further to this point, he also framed some context around the superannuation tax concessions for high-income earners.

“People think that the tax concessions for super are not only large, but are unfair and the concessions are going to the high-income people who don’t deserve them,” he said.

“Even the Murray report picked up on this and produced a chart that showed the top 20 per cent of income earners get around 56 per cent of the tax concessions.

“When you look at it that way, it doesn’t look fair – it just looks wrong. But when you look at the other side of the coin, you’ll see that the same top 20 per cent of income earners pay 64 per cent of all income tax.

“So really, with a little bit of insight, you can see it’s hardly surprising that the major benefit of tax concessions go to the people who pay the most tax.”

He reiterated the situation showed proper analysis was needed in the tax white paper to determine who actually paid tax in Australia before any changes to retirement savings policies were made.

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