As superannuation increasingly looks to be a target of the government’s national tax reform, AMP SMSF’s head of policy, technical and educational services Peter Burgess told SMSF Adviser it’s necessary to have a more holistic approach to calculating superannuation tax concessions.

“It’s never been more important than now, because we’ve got the discussion paper coming out on the tax white paper very shortly and we expect there’s going to be a lot of discussion around these concessions, and also how these concessions are allocated across the different income ranges,” Mr Burgess said.

“If we’re going to move this debate forward, we’re going to need a lot more holistic and sophisticated approach to valuing these tax concessions, with a model that does factor in the offset in reductions in the age pension costs.”

These comments follow the Financial System Inquiry’s call for taxation arrangements within super to be reformed to satisfy long-term fiscal objectives.

While the FSI’s final report did not make any specific recommendations for changes to the taxation of superannuation, it stated that superannuation tax concessions “are not well targeted” at the objectives of the superannuation system.

“Individuals with very large superannuation balances are able to benefit from tax concessions on funds that are likely to be used for purposes other than providing retirement income, such as tax-effective wealth management and estate planning,” the report stated.

“As a result, the majority of tax concessions accrue to the top 20 per cent of income earners. These tax concessions are unlikely to reduce future age pension expenditure significantly.”

In addition, industry bodies such as Taxpayers Australia have long predicted changes to superannuation tax concessions.

Speaking previously to SMSF Adviser, Reece Agland, superannuation products and services manager at Taxpayers Australia, said the “excessively generous” deductions in superannuation available to the wealthy are unsustainable and need to be considered in any genuine tax reform process.

“The government’s promised review of the tax system is the most likely conduit for any changes,” Mr Agland said.

“Although in order to maintain its pre-election promises (to not make adverse changes to superannuation in its first term) the government will most likely put off implementation of any changes until after the next election.”