The accuracy of the content is not guaranteed. Please rely only on the authorised document. Recent changes to Government policy regarding the taxation of assets moving from superannuation to retirement income streams have received a great deal of press in recent weeks. The Australian Retirement Income Streams Association is concerned that the debate has focussed only on self managed superannuation funds, and has ignored the effect on other superannuation funds offering retirement income streams, such as those offered by life companies, fund managers and master funds. The Chairman of ARISA, Mr Tony Negline, said that these proposed changes affect all providers of income streams to some extent, and called on the Government to remember this as it formulates a response to the growing opposition to this tax. In particular, many taxpayers who have used discretionary master funds for their superannuation savings will be impacted in the same way as those who have a self managed fund. "The Government needs to ensure that its retirement income policy is applied consistently so that the possibility of product "arbitrage" is avoided. Consistency in treatment of retirement income stream products needs to be considered separately from the issue of taxation of life company profits, with which it has become entwined within the legislation" Mr Negline said. "ARISA has been heavily involved in discussing the tax changes for life companies and retirement income streams over the past six months. We are pleased that the Government decided not to proceed with the recommendations of the Ralph Report, which would have involved a loss of the tax-exempt status of retirement income streams as well as drastically increased administrative complexity. "There are a number of beneficial effects of tax reform on many retirees, including the ability to claim excess imputation credits. Nevertheless, it must be recognised that the new tax rules for retirement income streams are not as beneficial for some retirees as the current rules, possibly resulting in some additional tax on retirees as well as a new level of administrative complexity. While ARISA does not dispute the Government’s right to implement a new tax, a number of aspects of this tax are concerning, including:
ARISA has also noted that the legislation in relation to life companies could make some long-term guaranteed income streams less attractive to retirees. This is despite current social security policy acting to encourage retirees to secure a long-term retirement income by using these products. ARISA has called on the Government to urgently review the limitations on retirement income stream products. Sensible changes to the rules can open up the market to more innovative retirement income stream products, with retirees as well as Government the ultimate winners.
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