Speaking at The Australian Financial Review Business Summit yesterday, Federal Treasurer Scott Morrison confirmed that superannuation tax concessions will be reined in in the May budget.
The changes to super concessions will align with changes to asset thresholds to the part-pension that the Government announced in 2015.
“Last year we successfully legislated the first phase of our reforms to retirement incomes with our changes to the pension assets test, reversing the taper rate changes of the Howard–Costello Government that had extended access to a part pension to those with assets in addition to the family home of more than $1 million,” said Mr Morrison. “These changes were based on the simple principle that the pension is a welfare payment for those who are not in a position to support themselves independently in retirement.”
In what is being termed “the second phase of reform to retirement incomes”, winding back super tax concessions is one of the few viable options for effective tax reform left on the table. After recommendations from the Financial System Inquiry (FSI) led by David Murray, the Government is taking steps to ensure a fair and sustainable retirement income system.
Whilst superannuation remains an area of interest for tax reform, other oft-speculated options such as cuts to personal and company income tax rates, have been all but ruled out, with Mr Morrison claiming that other measures are a priority.
He also stuck to his mantra that the most pressing concern of this year’s budget is to control expenditure, saying that further tax cuts would only come about through the creation of jobs and economic growth.
Although there has been speculation that the budget could be expedited to 3 May to make way for a possible early election, Mr Morrison said it will still go ahead on 10 May as planned.
What do you think of the Government’s announcement that it will wind back super tax concessions? Is this good news for you? Or do you feel tax reform could come through other avenues? What do you suggest?