THE Government’s proposed provisions for superannuation funds will undermine the superannuation system, according to the Institute for Chartered Accountants in Australia.
The ICAA says the proposed revisions relate to applying capital gains tax upon commencement of pensions – a completely new tax that will confuse the implementation of the new taxation system.
ICAA executive director Stephen Harrison said the provisions had crept into the New Business Tax System reform which were not intended to impact on superannuation funds.
“The proposed provisions are complex and require additional changes....to allow for implementation of resulting changes to segregated asset pool rules,” Mr Harrison said.
“The approval of these additions will mean holders of pension funds will be forced to segregate assets which will, in turn, increase costs and add complexity to the taxation process.
“Whereas in allocated pension funds the level of a member’s income stream is partly determined by their account balance, these new capital gains tax proposals will mean reduction of these balances and as a result, pension levels,” he said.
“While the Institute supports the reform process, the inclusion of these changes will undermine, not only the reform process, but the entire superannuation system,” Mr Harrison said.
