The Australian Council of Social Service (ACOSS) has called for a change to the superannuation tax system in an effort to help better fund aged care.
The welfare group said the Federal Government should impose a 15% tax on all superannuation earnings during a person’s pension years, the same as pre-pension years.
ACOSS said the current system isn’t sustainable because only 16% of people aged over 64 pay income tax, despite many having the capacity to do so.
The submission to the Retirement Income Review also outlined tax avoidance issues.
“The non-taxation of fund earnings in the so-called ‘pension phase’ opens up tax avoidance opportunities that have little to do with saving for retirement,” the submission read.
“People can avoid paying tax on capital gains accrued through working life by transferring or retaining assets in a self-managed superannuation fund until they reach the age of 60.”
After turning 60 the fund pays them a pension, at which point the fund’s earnings, including capital gains, are tax free.
It’s hoped the extra revenue from a tax overhaul could be used to better “guarantee affordable access to quality aged care services”.
The submission stated that $5 billion in extra public revenue from 2021 to 2022 would guarantee quality, affordable aged care and help close the gaps.
However, that number would have to continue to grow in later years as the population ages.