In its tax white paper submission, the SMSF Owners’ Alliance (SMSFOA) has thrown its support behind the adoption of a taxed-exempt-exempt (TEE) taxation system for superannuation, recommended by Ken Henry in his “Australia’s Future Tax System” report in 2010.
“SMSFOA believes that if a structural change to the taxation of superannuation is to be seriously considered as part of the tax white paper process, then a closer examination of the benefits of a TEE system is warranted,” the industry body said.
Under the proposed TEE system, an individual’s superannuation contributions would be taxed at progressive income rates with a flat percentage rebate as they would be included as part of the person’s taxable income.
In addition, the system would see tax-free superannuation earnings and pensions remain.
“The system is more effective than the current one at the same cost to the government,” the SMSFOA said.
“Our analysis shows that the TEE alternative would be revenue neutral or possibly revenue positive, but result in more Australians succeeding in having enough super to be independent of the government-funded age pension.
“We do not accept that a review of superannuation necessarily implies an increase in taxes on super. A thorough review should consider improvements that can be tax neutral to the government.”
The lobby group stipulated its position that the government’s challenge was to find a way to make superannuation work better for more Australians rather than extract more revenue from superannuation as a fiscal measure.
To that end, it suggested the distinction between tax concessions on retirement savings contributions and tax concessions on the earnings within super had to be recognised before a better tax structure could be formulated.
