http://www.abc.net.au/news/2015-11-23/super-saving-idea-could-end-up-costing-tax...Introducing a lifetime cap on superannuation — a proposal being floated as a potential saving — could actually cost taxpayers more, according to the Parliamentary Budget Office (PBO).
The finding will put a dampener on enthusiasm for the idea, adding to concerns about the potential problems with implementation.
Greens treasury spokesman Adam Bandt said high income earners tend to pour money into superannuation shortly before retirement to maximise subsequent tax benefits.
"[They] put it into superannuation knowing that they can then draw it out again in couple of years tax free," Mr Bandt said.
To counter that, some people have argued for a cap on lifetime superannuation contributions.
Mr Bandt said recent reports suggested the measure was being considered by the Treasury.
It is thought the measure might stop
that problem of people putting a lot of money into superannuation in their final working years in order to minimise tax when they are already looking very healthy for their retirement.
The Greens had the PBO calculate the savings if there was a $500,000 lifetime cap on voluntary contributions.
Mr Bandt said the measure
might only
save about $165 million over four years.
That would not generate the required savings, he said, "when the cost of super tax concessions as a whole is set to be $170 billion over the same period".
"We're concerned that the PBO costings suggest that if you put the cap any higher than $500,000, it
might actually cost the budget
money," he said.
"Now that would be an extremely counter-productive thing to do."
The figures showed a cap of $600,000 would cost the budget $85 million over four years.
Introducing lifetime cap 'problematic'John Daley from the Grattan Institute also warned about the problems of administering a lifetime cap.
"We only really have very good records back to about 2003, so anyone who has put any money in before 2003 will probably get a free pass," Mr Daley said.
"And superannuation which has of course already delivered phenomenally large tax breaks to an older generation will effectively deliver even more."
Mr Bandt said he was still open to a lifetime cap but argued the real savings, adding up to potentially $10 billion, would come from making superannuation tax rates more closely aligned with income tax rates.Mr Daley argued for a lower cap on the amount of pre-tax dollars that can go into superannuation, from $35,000 to around $10,000 or $11,000 a year.
He said that, over a lifetime and combined with other savings, that was likely to provide enough to retire on without needing the aged pension.
"That's the point at which support from the taxpayer for your retirement really ought to stop," he said.
"Our suggestion is cap the amount you can put in at $10,000-$11,000 in any one year.
"It is also then administratively reasonably simple — you don't have to be keeping track of people over their entire lives."
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