AUSTRALIA - Australia's largest accounting and finance group, CPA Australia, has called on the Federal government to abolish a number of key superannuation taxes in a bid to encourage people to work, save and invest.
In its 2005-2006 pre-budget submission, CPA Australia chief executive Greg Larsen (pictured) said: “The current tax system still has its disincentives. We want to see a system that encourages Australians to work, save and invest. Reform in personal taxation and superannuation is a matter of national interest and necessity.”
CPA called on the government to:
- Conduct a comprehensive review of superannuation taxation- Abolish the 15% up front contributions tax and super surcharge- Make super contributions made by the self-employed fully tax deductible up to the age-based limits- Amend the co-contribution scheme to allow low income self-employed persons the option of claiming the co-contribution or a tax deduction on their super contributions- Allow individuals over the preservation age to be able to turn retirement income streams on or off as their income needs change
In the submission, CPA said taxation of superannuation was “complex and multifaceted” with taxes on contribution, investment income and final benefits, and limitations on allowable deductions for super contributions.
“Such complexity reduces the attractiveness of superannuation as a long-term savings vehicle,” CPA said.
“Further, recent tax income cuts for individuals and companies have significantly undermined the relative tax effectiveness of superannuation as a retirement savings strategy.
“There is virtually no financial incentive in super for income earners on the 17% marginal tax rate and only marginal advantage for those on average earnings (30% marginal tax rate), once the lack of access and cumulative impact of taxes are taken into account.”
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