Capping superannuation not straightforward
Source: Taxation In Australia Journal Article
Published Date: 1 Apr 2023
This article discusses why, in the author's opinion, the introduction of further capping of superannuation tax concessions should be via the tightening of the existing capping measures, not the introduction of yet another layer of tax that is levied on a notional earnings amount. The proposed earnings surcharge that will apply an additional 15% tax to earnings of member balances above $3m has prioritised simplicity over good policy design. Although the earnings surcharge is assumed to affect a low number of people at introduction, over time, many more superannuation members will be scooped up due to the non-indexation of the reference threshold for implementation against continued indexation of other superannuation thresholds. The design of the formula for calculating the affected earnings introduces the taxing of unrealised capital gains which may be the trailblazer for further application across other entities. As it stands, a small number of superannuants are being used for beta testing of this potentially new way of taxing.
(PDF updated on 25 July 2023 with minor correction).
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Details
- Published By: Kym Bailey
- Published On:1 Apr 2023
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