Death and taxes to enjoy a closer relationship
The federal government is thought to be looking at removing the so-called ‘death bonus’ on self-managed superannuation funds.
Giving a speech in Sydney yesterday, new Treasurer Scott Morrison re-iterated that changes to the superannuation system were still on the table.
“The PM has made it clear other areas of commonwealth taxes such as generous superannuation concessions are also under the microscope as well as broader tax integrity measures,” he said.
According to the Australian Financial Review, one of the government plans to close superannuation tax loop holes would be to get rid of the “anti-detriment payment” on SMSF funds.
The way the system currently works, 15% of the contributions made by a member of an SMSF during the accumulation phase of the fund can be refunded to a person’s next of kin or spouse.
The proposed changes would not stop beneficiaries from receiving this, but would open this payment up to taxation.
The federal government reportedly misses out on $100 million a year by not taxing the anti-detriment payment.
The AFR quoted Liberal MP Michael Sukkar who is fronting the changes.
“Imagine a system whereby, after paying taxes throughout our lifetime, our dependant spouse, former spouse or children, could get a refund of those taxes when we die?” he was quoted as saying.
“A little known quirk in our superannuation system enables just that.
During a wide-ranging speech yesterday, Morrison said Australia’s tax system is outdated and was in sore need of reform.
“Australia’s tax system was designed in a different era, and a different economy. It was not designed to deal with multinational trade, increasing global competition for investment, the internet, the digital economy and an ageing population,” Morrison said.
Many features of the existing system will, over time, limit jobs growth and make it less attractive to invest in Australia, affecting Australia’s continuing prosperity.