Despite a pre-election promise to leave superannuation untouched, the Government has flagged changes to the concessions afforded to superannuation savings as a part of its discussions with the nation on tax reform.
This week the Government released a tax discussion paper to kick-start an ongoing conversation with stakeholders and other interested parties on the future of the Australian tax system. The 'Re:think' discussion paper calls for "lower, simpler and fairer taxes" and addresses the complexity of the current system, its high reliance on income tax, the GST and the imbalance in taxation treatments between different saving measures, including superannuation and dividend imputation.
In particular the discussion is aimed at dealing with the long-term sustainability of the system in light of an aging population. A natural implication of this looming issue is that many of those currently sustaining the income tax system will, in the coming decades, move to a position of paying no income tax at all through superannuation.
In view of this the Government has suggested, in conjunction with the launch of the paper, that some of the more generous superannuation concessions are something that may be looked at in the future, particularly if they are able to secure bipartisan support for any reforms. One aspect of the system that may be targeted is the tax-free status of all superannuation income in retirement.
The logic is that as a implement to encourage retirement savings and release pressure on the Aged Pension system, exempting all retirement income from tax provides a much greater benefit to the wealthy, who are the least likely to draw on the Aged Pension anyway. Others may argue of course that it is the wealthy who have paid a lot more tax during their working life.
Either way, it seems likely that change of some sort will eventually come, which will continue the ever-shifting nature, and uncertainty, of the superannuation landscape in Australia.