Accountants warn on transition to retirement
The Institute of Chartered Accountants (ICAA) has warned the Government against too much tinkering with the superannuation tax settings, but urged that any overhaul encompass the current transition to retirement pension system.
In a pre-Budget submission released yesterday, the ICAA said that while the original policy objectives of the transition to retirement regime continued to be appropriate, the legislative design of the rules allowed for tax minimisation "by individuals who are not genuinely transitioning to retirement".
It said that in many cases such people continued to work in full-time employment without any immediate plans to move towards less than full-time employment as part of their retirement strategy.
"We believe that amendments to this aspect of the superannuation system may be warranted to better align the specific tax rules with the original and enduring policy objectives of transitioning towards retirement," the submission said.
The ICAA also referenced tax-free earnings for funds in pension phase, and said that if the Government planned to look at reforms in this area it needed to remember that the policy of tax exemptions for funds paying income streams was a highly attractive feature in promoting the benefits of income streams over lump sums.
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