The Senate Select Committee on Superannuation has reported its findings stating that the current system for taxing transfers from foreign superannuation was too heavy and prevented many people from bringing their retirement savings into the country.
The report says this result goes against the stated aims of superannuation in Australia which was to promote the private accumulation of savings in Australia to fund retirement incomes.
The findings were handed to the President of the Senate, Margaret Reid, on Thursday by the chair of the committee Senator John Watson who said that the system should promote savings but tax rates were prohibitive and current arrangements were difficult and unfair for those who wish to transfer funds.
Watson also said this lack of new funds had further impacts as domestic investment markets were being unable to access funds that could be used in the wider Australian economy.
As part of dealing with the problem the Committee made a number of recommendations including taxing foreign superannuation monies at a rate that generally applies to the earnings of the Australian regulated fund into which the funds have been transferred, instead of the individual’s marginal tax rate, which is usually higher.
The Committee was also critical of the time period in which recent migrants are given to ensure their superannuation can be transferred tax free and said that the period was not long enough to encourage migrants to transfer the funds.
As such it has recommended that the time frame be extended from six months to two years.
CPA Australiahas endorsed both recommendations saying they were in keeping with the accountancy body’s submission to the Committee.
In its submission CPA Australia called for a tax limit either based on capital gains tax provisions of 10 per cent or a superannuation contribution at 15 per cent for superannuation funds transferred from offshore.
The accountancy body also said the potential for double taxation should be removed and where the transfer of funds is made to a resident superannuation fund, the liability for the tax should be passed to the super fund.
