A plan to
simplify and streamline superannuation
The Government is proposing a plan to sweep away the current raft of
complex tax arrangements and restrictions that apply to people’s
superannuation benefits. This would improve retirement incomes and increase
incentives to work and save.
Under the proposed plan, from 1 July 2007:
- Superannuation benefits paid from a taxed fund either as a lump sum
or as an income stream such as a pension, would be tax free for people
aged 60 and over.
- Benefits paid from an untaxed scheme (mainly public servants)
would still be taxed, although at a lower rate than they are now
for people aged 60 and over.
- Reasonable benefit limits (RBLs) would be abolished.
- Individuals would have greater flexibility as to how and when to
draw down their superannuation in retirement. There would be no forced
payment of superannuation benefits.
- The concessional tax treatment of superannuation contributions and
earnings would remain. Age-based restrictions limiting tax deductible
superannuation contributions would be replaced with a streamlined set
- The self-employed would be able to claim a full deduction for their
superannuation contributions as well as being eligible for the Government
co-contribution for their personal post-tax contributions.
- The ability to make deductible superannuation contributions would
be extended up to age 75.
- It would be easier for people to find and transfer their superannuation between funds.
To increase further the incentives to save for retirement it is proposed
to halve the pension assets test taper rate to $1.50 per fortnight from
20 September 2007.
The superannuation preservation age would not change. The preservation
age is already legislated to increase from 55 to 60 between the years
2015 and 2025. People would still be able to access superannuation benefits
before the age of 60, although they would continue to be taxed on their
benefits under new simplified rules.
A plan to simplify and streamline superannuation