Tax White Paper process: what it means for superannuation

Tax White Paper, Tax Discussion Paper, superannuationTreasurer Joe Hockey has started the Tax White Paper process with the release of the “Re:Think” Tax Discussion Paper.

We want to have an open and constructive conversation with the community on how we can create a better tax system that delivers taxes that are lower, simpler, fairer.

In more than 200 pages the Tax Discussion Paper raises 66 questions, asking for comments rather than making recommendations at this stage.

Tax Discussion Paper: Superannuation

The Tax Discussion Paper asks the question:

22. How appropriate are the tax arrangements for superannuation in terms of their fairness and complexity? How could they be improved?

Several issues with the taxation of superannuation are raised in the discussion paper. The different tax rates applying to accumulation and pension phase increase the cost of the superannuation system. “They also give rise to tax planning opportunities that are usually more accessible to high income earners,” such as delaying the sale of assets until they are in pension phase and so don’t result in CGT. This tax structure “may also complicate the development of retirement income products.”

The Tax Discussion Paper says an aging population moving from accumulation to pension phase will “put pressure on the long-term sustainability of the superannuation tax arrangements.”

The issue of the flat tax on superannuation contributions is also raised, as this means “most high income people receive a larger tax concession, relative to their marginal tax rate, than low income people.”

“The same is true during the accumulation phase and even more so during the retirement phase when there is no tax on earnings. ”

The Tax Discussion Paper refers to the ‘observations’ of the Financial System Inquiry (FSI). While not recommending general taxation changes the inquiry was allowed to make observations to inform the Tax White Paper. The FSI final report said:

In reviewing the taxation of contributions and investment earnings in superannuation, the Tax White Paper should consider:

  • Aligning the earnings tax rate across the accumulation and retirement phases.
  • Options to better target superannuation tax concessions to the objectives of the superannuation system.

Tax White Paper process

The Tax Discussion Paper is really only the start of the process. Submissions are being accepted until the 1st of June 2015, leaving a little over two months for comments on the issues raised. The Government will then release a tax green paper in “mid to late” 2015. The Tax White Paper will be released before the next federal election, which is due to be held no later than 14 January 2017.

The Government is encouraging people to join the conversation around the Tax White Paper process at, or using the hashtag #bettertax.

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3 thoughts on “Tax White Paper process: what it means for superannuation”

  1. In my humble opinion to reduce the pressure on sydney etc. house price we should
    1 abolish negative gearing on any more than one investment property(why should taxpayers fund high level wealth generation)
    2 after three or so years then also abolish negative gearing on existing properties

  2. Be able to earn $25.000 tax free, this way the people on the dole and pension can earn extra money to survive. For young people on the dole, cut it back to $500. a fortnight. For people earning $5000 a week, double tax after that. Up the G.S.T. to 15%. Put the tax up on fuel, and let all working people claim travel expenses. To get paid for the dole drug and alcohol tests once a fortnight , then be able to show at least four employers notes of proof you have looked for work, then pay them. A centre can be a new work place in each municipality. A lot of nurses are looking for part time work. No more free childcare and no more maternity leave, this is a choice just like, where you live to find work. The gvt is going broke. All we need is free education and free medical. only in public Schools and Hospitals. Stop making it to easy for bludgers Get the young one’s to work and retire people at 65, Good luck Joe. .

  3. Sorry I was always a stay at home mum, and worked in seasonal jobs, so I have no super to worry about. But all my children are in the work place, So I’m safe to get a pension when I turn 65. Their employee, the federal GVT will see to this. I have done my time, now you pay my fee, I’m 64 and survived without handouts from the gvt.

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