It is important to look at and understand how Australia chooses to tax the super system when debating the proposed superannuation changes, KPMG believes.
The firm's tax advisory partner, Damian Ryan, said tax policy within super would inform how a government could respond to the growing cost of tax concessions as more members moved into pension phase.
Ryan said one of the issues that needed to be looked at was: "Once we understand the extent to which we are prepared to provide tax concessions to assist Australians reach their retirement incomes objectives, have we got the current tax policy settings correct?"
He said that while most pension systems had an "E-E-T" taxation regime, where contributions to the pension system were tax deductible, earnings were exempt from tax, and benefits were subject to tax (at varying rates), Australia had a "t-t-E" system.
The t-t-E regime had contributions concessionally taxed, earnings throughout the accumulation phase were concessionally taxed, and benefits were (largely) tax free.
"In effect, what this type of system does is that it brings forward the taxing point to the contributions and earnings phase. However, in doing so, there is limited capacity in pension and benefits phase to further tax (excessive) benefits based on capacity to pay," Ryan said.
"Accordingly, the levers our current system provide are to restrict the amount of money that comes into the system (either via concessional or non-concessional contributions) or to limit the amount of funds that can be held in pension phase (the transfer balance concept)."
Ryan noted that alternative models could require funds to be withdrawn from the system, taxing income in pension phase, or taxing benefits.
The other issues Ryan said needed to be looked at were:
Michael Lovett, who left the investment firm just three months after launching its Vanguard Super offering, has taken up a chief executive role at an Australian asset manager.
The Central Bank of Ireland has granted the approval of Equity Trustees’ exit from its Irish operations, with the transaction expected to be complete on 30 April.
Super returns continued to climb in March, raising hopes of delivering double-digit returns by June depending on the performance of this next quarter.
The dedicated super fund for emergency services and Victorian government employees is under fire for unpaid entitlements to transport employees, which could exceed $40 million.
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