We are discussing a proposed law which wants to abolish the returning of franking credits in cash. Undo what Howard changed. Simple as that.Actually I think it's not that simple because in the 2006 Federal budget other changes were made.
Not taxing the end benefit of taxed super funds.
Some say they have it erse about.
It would be better to make more tax concessions on the money going into and earned by funds and tax the end benefit at a modest rate. People would use their credits then.
There would also be generations of people that would consider the change unfair.
So they tinker.
Simpler Super.May 09, 2006Mr Speaker, tonight I release a plan to simplify and streamline superannuation. This plan represents the most significant change to Australia’s superannuation system in decades. It will sweep away the current raft of complexity faced by retirees, increase retirement incomes, give greater flexibility as to how and when superannuation can be drawn down, and improve incentives for older Australians to stay in the workforce.
At the core of the plan is the proposal to exempt Australians aged 60 or over from any tax on their end benefits where these are paid from a taxed superannuation fund. This would apply from 1 July 2007. There would be no tax on a lump sum. There would be no tax on a superannuation pension. This would be the most direct way of cutting through the complexity of the current system.
Reasonable benefit limits would be abolished. Age based limits would be abolished. A simple universal contribution limit would apply. People would not be forced to draw down on their superannuation.
The self-employed would be able to claim a full deduction for their superannuation contributions. The self employed would be eligible for the Government co-contribution. It would be easier for people to find and transfer their superannuation between funds.
It is also proposed to halve the pension assets test taper rate from $3.00 to $1.50 per fortnight for every $1,000 of assets above the free area with effect from 20 September 2007. The current taper rate of $3.00 means that a retiree loses more age pension than they earn on their additional savings if they do not achieve a return of at least 7.8 per cent a year. This is a large disincentive to save for retirement.
