Superannuation tax concession costs 'grossly overestimated'
The cost of further superannuation tax concessions is inaccurate and based on outdated data, according to new research released by the Association of Superannuation Funds of Australia (ASFA).
The estimates for what superannuation tax concessions would cost are grossly overestimated, and the actual cost of super tax concessions could be as little as half that reported in the 2011 Tax Expenditures Statement, according to ASFA's 'The equity of Government assistance for retirement income in Australia' report.
Overall superannuation tax concessions are predominantly equitable, and many of the figures and statistics currently being used in debate around the equity of the super system are incorrect or outdated, the report found.
The greatest beneficiaries of tax concessions on superannuation are currently middle income earners - contrary to the perception that high income earners are favoured.
Tax concessions would become even more equitable, given an increase in the superannuation guarantee and the low income earners contributions tax rebate, combined with the contributions caps, ASFA stated.
Figures such as the statistic that Australia's top 5 per cent of income earners receive 37 per cent of total superannuation contributions are outdated and relate to a time when the concessional caps were higher; it is currently less than 20 per cent, said ASAF chief executive Pauline Vamos.
ASFA said there was still room for improvement in the superannuation system, with gaps in coverage relating to the inequitable treatment of the self-employed.
Low contributions caps also discriminate against women and others with variable work patterns, Vamos said.
Other reforms including Stronger Super and the Future of Financial Advice will deliver improvements to the system, but further fundamental changes could undermine confidence in the system, she said.
"ASFA believes the focus for policy makers should be on improving the coverage and effectiveness of the current system rather than throwing it out and starting again," she said.
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