Offshore super unfairly slugged

taxation/superannuation-funds/retirement-savings/capital-gains/

29 July 2002
| By Jason |

The Senate Select Committee on Superannuation has reported its findings stating that the current system for taxing transfers from foreign superannuation was too heavy and prevented many people from bringing their retirement savings into the country.

The report says this result goes against the stated aims of superannuation in Australia which was to promote the private accumulation of savings in Australia to fund retirement incomes.

The findings were handed to the President of the Senate, Margaret Reid, on Thursday by the chair of the committee Senator John Watson who said that the system should promote savings but tax rates were prohibitive and current arrangements were difficult and unfair for those who wish to transfer funds.

Watson also said this lack of new funds had further impacts as domestic investment markets were being unable to access funds that could be used in the wider Australian economy.

As part of dealing with the problem the Committee made a number of recommendations including taxing foreign superannuation monies at a rate that generally applies to the earnings of the Australian regulated fund into which the funds have been transferred, instead of the individual’s marginal tax rate, which is usually higher.

The Committee was also critical of the time period in which recent migrants are given to ensure their superannuation can be transferred tax free and said that the period was not long enough to encourage migrants to transfer the funds.

As such it has recommended that the time frame be extended from six months to two years.

CPA Australiahas endorsed both recommendations saying they were in keeping with the accountancy body’s submission to the Committee.

In its submission CPA Australia called for a tax limit either based on capital gains tax provisions of 10 per cent or a superannuation contribution at 15 per cent for superannuation funds transferred from offshore.

The accountancy body also said the potential for double taxation should be removed and where the transfer of funds is made to a resident superannuation fund, the liability for the tax should be passed to the super fund.

Read more about:

AUTHOR

Recommended for you

sub-bgsidebar subscription

Never miss the latest news and developments in wealth management industry

MARKET INSIGHTS

So we are now underwriting criminal scams?...

2 months 3 weeks ago

Glad to see the back of you Steve. You made financial more expensive, not more affordable as you claim, and presided ...

2 months 4 weeks ago

Completely agree Peter. The definition of 'significant change is circumstances relevant to the scope of the advice' is s...

5 months ago

ASIC has suspended the Australian Financial Services Licence of a Melbourne-based financial advice firm....

1 week 6 days ago

The corporate regulator has issued infringement notices to three AFSLs whose financial advisers provided personal advice to a retail client while unregistered....

2 weeks 4 days ago

ASIC has released the results of its first adviser exam to be held in 2025, with 241 candidates attempting the test....

3 weeks 2 days ago

TOP PERFORMING FUNDS

ACS FIXED INT - AUSTRALIA/GLOBAL BOND