In a letter to both Treasurer Scott Morrison and Assistant Treasurer Kelly O’Dwyer, SMSFOA chairman Bruce Foy said Australia used to have a super system which was under an international standard “recognised as the ideal benchmark for an efficient savings system”.
“Under this Standard, contributions and earnings are tax exempt while the final pension is taxed (also referred to as EET). However, because of new super taxes introduced by previous governments, it is now difficult to revert to this standard,” said Mr Foy.
Mr Foy said Australia should move closer to this standard by removing all tax on superannuation earnings and changing the taxation of contributions.
“We support the proposal for progressive taxation of contributions with a flat percentage rebate as first recommended by Dr Henry in his 2009 review of Australia’s Future Tax System,” he said.
“To avoid more ‘bracket creep’, this should only be done at the same time as income tax thresholds are raised, leading to a fairer super system for low and middle-income earners.”
Mr Foy said modelling carried out by the SMSFOA shows that if the rebate is set at 15 per cent and all earnings are exempt, then tax receipts by government would be slightly higher than under the standard system.
“In other words, there would be no tax concessions when compared to this standard,” he said.