The Federal Government has been urged to leave the superannuation tax settings substantially on hold in this year’s May Budget on the basis that the current superannuation and pensions settings are working, according to the Association of Superannuation Funds of Australia (ASFA).
ASFA has used its pre-Budget submission to the Treasury to strongly argue the case that what is now most needed is a period of policy stability to allow previous Budget changes to be bedded down.
“ASFA considers that given substantial changes to the taxation of superannuation and the provision of the Age Pension in recent years, including in the 2013-14, 2014-15 and 2016-17 Budgets, there should now be a period of consolidation to allow the various changes to be bedded down,” it said.
“The May 2016 Budget changes have reduced the overall amount of tax concession for superannuation contributions by around $1.25 billion a year. As well, there has been a substantial change in the distribution of the tax concessions by income tax rate band,” it said.
“The changes decreased the proportion of the concessions going to those on the top income tax rate from 13.3 per cent of the concessions to 10.8 per cent. The proportion of the concessions going to those on $37,001 to $80,000 increased from 34.7 per cent to 36.9 per cent, while the proportion of the concessions going to those on $18,201 to $37,000 increased from 11.9 per cent to 12.4 per cent.”
Reinforcing its case, ASFA pointed out that following the January 2017 Age Pension changes, the number of Age Pension recipients fell from 2,570,072 in December 2016 to 2,494,060 in March 2017, a fall of 3 per cent.
“The number of full rate Age Pensioners rose marginally, from 1, 515,411 to 1,548,590 a rise of around 2 per cent,” it said. “The number of Age Pension recipients has continued to fall, with 2,489,591 in total in September 2017.”
“It is clear the recent changes to the Age Pension and to tax treatment of superannuation have substantially reduced expenditures and increased tax collections in the Budget,” the submission said. “Most of the impact of the tax changes has been on those in the top two tax brackets, substantially realigning the equity of the provision of tax assistance in regard to superannuation.”