Retirement income policy and the taxation of superannuation in Australia

O'Connell, Ann 2003, Retirement income policy and the taxation of superannuation in Australia, Bulletin for international taxation, vol. 57, no. 8, pp. 431-441.

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Title Retirement income policy and the taxation of superannuation in Australia
Author(s) O'Connell, Ann
Journal name Bulletin for international taxation
Volume number 57
Issue number 8
Start page 431
End page 441
Publisher International bureau of fiscal documentation (I.B.F.D)
Place of publication The Netherlands
Publication date 2003
ISSN 0007-4624
Summary Superannuation is a form of savings for retirement. The savings are invested and earn income, but the proceeds are generally not available until the beneficiary reaches retirement age} The federal government's retirement income policy has three components, two of which relate to superannuation: the age pension, which provides income support to men aged 65 and over and to women aged 62 and over.2 The pension is means tested and does not depend on previous labour force participation or individual contributions; a compulsory superannuation scheme (under the Superannuation Guarantee Charge (Administration) Act 1992 (SGA Act)), which requires contributions to be made by employers on behalf of all employees, whether full-time, part-time or casual;3 and encouragement, through the taxation system, of voluntary contributions to approved superannuation funds.4 In May 2002, the government released a report, the "Intergenerational Report", 5 which identifies issues associated with Australia's ageing population and considers the fiscal implications of those changes. The Report noted that a steadily ageing population is likely to place significant pressure on government finances. It also noted that one of the key priorities for ensuring fiscal sustainability should be "maintaining a retirement income policy that encourages private saving for retirement and reduces the future demand for the Age Pension". 6 The main way the government has sought to encourage that private saving is through the tax system, primarily by the use of tax concessions. Over the past 20 years, however, the taxation of superannuation has grown in an extremely ad hoc manner and is now inequitable, inefficient and overly complex. This article suggests that the taxation of superannuation in Australia is in urgent need of a complete review. The article further asserts that, if an appropriate framework can be devised, changes could be introduced as budgetary pressures allow.
Language eng
Field of Research 180125 Taxation Law
HERDC Research category C1 Refereed article in a scholarly journal
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