An article on SMSF Adviser illustrates a few takeaways from the Federal Budget. One of the graphs talks about the tininess of tax concessions and the overriding significance of accumulated earnings. The Federal government has abstained from making any changes in the Superannuation tax structure and has waited for the outcome of the White Papers review to make any alteration. Above anything, it shows that the government is keen on a measured approach and does not want to act in haste and repent in leisure.
Age pension
What does a well laid out Superannuation system do for the retirees? It tries to ensure that maximum number of people retire on pension (which is proportional to the income they had during their working life). The status quo we have is not perfect but the savings attributed to the age pensions are decidedly greater than the tax concessions. This, surely, helps the government achieve net benefit.
Super tax concession
Another graph beautifully illustrates what the per capita cost to the budget of the retirement system is if we add the cost of Age pension and Superannuation tax concessions received by a person over his lifetime. It is clear that a rise in income will bring down the associated costs even faster. It is being argued that Super tax concessions pan out better in the long run than Age pension payments.
Accumulated earnings
The article asserts through graphs that the biggest part in the retirement income is being played by the Super’s accumulated earnings. High cost and relatively low returns on the Super balance are being cited as the major worry. This deficiency highlighted by the Financial System Inquiry may be rectified in due course by the White Paper Reivew.
You can read the original article here.
White Paper review
The outcome of the White Paper review is being eagerly awaited by the Superannuation holders. The Federal Budget has not brought regulatory changes and kept the taxation structure intact. While this has given temporary relief to many, there is a consensus that the structure of taxation is unfair and biased towards the rich. A thorough review and guideline changes are only expected.
