The Association of Superannuation Funds of Australia (ASFA) has recommended that non-concessional contributions be subject to a lifetime cap, and super tax-concessions should be removed for super balances above $2.5 million.
The research paper, The equity and sustainability of government assistance for retirement income in Australia, makes several recommendations:
- The level of concessional contributions should continue to be capped
- A lifetime cap for non-concessional contributions should be introduced
- Tax concessions should not apply to very high superannuation balances
ASFA Superannuation Recommendations
The level of concessional contributions should continue to be capped
ASFA argues that the cap on concessional contributions is reducing the tax concessions available to high-income earners and should be continued:
“The current concessional caps are working, so the thresholds should not be lowered, but indexing them is important”.
A lifetime cap for non-concessional contributions should be introduced
The paper also argues that high-income earners can use the non-concessional contributions cap to accumulate large, concessionally-taxed, superannuation balances. ASFA says a better policy would be a lifetime cap on non-concessional contributions, as this would “ensure that superannuation is used to provide income in retirement and is not used for wealth accumulation or estate planning purposes”.
Tax concessions should not apply to very high superannuation balances
ASFA also wants the “disproportionate” amount of superannuation tax-concessions going to high-income earners reduced, and recommends removing “the concessional tax treatment for very high superannuation balances, for example those in excess of $2.5 million”. Though this level can be “adjusted in order to ensure the distribution of tax concessions is more equitable”.