Home' Policy Magazine : Policy Vol 32 - No 3 Contents GRANDFATHERING SUPER TAX INCREASES
8 POLICY • Vol. 32 No. 3 • Spring 2016
the objective of retirement funding. It paid close
attention to transitional issues, and remains an
excellent guide to modern superannuation tax
reform challenges (see box above).
More recently, the Gillard government’s
superannuation Charter Group led by Jeremy
Cooper addressed concerns about the future of super
savings and the way policy changes have been made.
The Charter Group reported to the second Rudd
government in July 2013 with useful proposals in
the form of a ‘superannuation constitution’ that
would codify the nature of the compact between
governments and savers, including:
• To promote confidence in the long-term
benefits, no change to superannuation should
be regarded as urgent.
• People should have sufficient confidence in
the regulatory settings and their evolution
to trust their savings to superannuation,
including making voluntary contributions.
• ‘Relevant considerations, when assessing
policy against the principle of certainty,
Justice Asprey on the Need for Careful Transitional Arrangements
21.9. Finally, and most importantly, it must be borne in mind that the matters with which the Committee is here
dealing involve long-term commitments entered into by taxpayers on the basis of the existing taxation structure. It
would be unfair to such persons if a significantly different taxation structure were to be introduced without adequate
and reasonable transitional arrangements. . . .
21.61. . . . Many people, particularly those nearing retirement, have made their plans for the future on the assumption
that the amounts they receive on retirement would continue to be taxed on the present basis. The legitimate expectations
of such people deserve the utmost consideration. To change suddenly to a harsher basis of taxing such receipts would
generate justifiable complaints that the legislation was retrospective in nature, since the amounts concerned would
normally have accrued over a considerable period—possibly over the entire working life of the person concerned. . . .
21.64. There is nonetheless a limit to the extent to which concern over such retrospectivity can be allowed to influence
recommendations for a fundamental change in the tax structure. Pushed to its extreme such an argument leads to a
legislative straitjacket where it is impossible to make changes to any revenue law for fear of disadvantaging those who
have made their plans on the basis of the existing legislation. . . .
21.81. . . . [I]t is necessary to distinguish legitimate expectations from mere hopes. A person who is one day from
retirement obviously has a legitimate expectation that his retiring allowance or superannuation benefit which may
have accrued over forty years or more will be accorded the present treatment. On the other hand, it is unrealistic and
unnecessary to give much weight to the expectations of the twenty-year-old as to the tax treatment of his ultimate
21.82. In theory the approach might be that only amounts which can be regarded as accruing after the date of the
legislation should be subject to the new treatment. This would prevent radically different treatment of the man who
retires one day after that date and the man who retires one day before. It would also largely remove any complaints
about retroactivity in the new legislation. . . .
Source: The Taxation Review Committee Full Report (31 January 1975), Chapter 21: Income Taxation in Relation to Superannuation and Life Insurance.
include the ability for people to plan for
retirement and adjust to superannuation
policy changes with confidence.
• ‘People should have sufficient time to alter
their arrangements in response to proposed
policy changes, particularly those people
nearing retirement who have made long-term
plans on the basis of the existing settings.
These Charter Group suggestions would also
appear to support the use of grandfathering in
the case of the tax increases proposed by both
major parties today. The Labor Party has recently
reaffirmed its commitment to the idea of a council
of superannuation custodians as recommended
in the Charter Group report.
Grandfathering fair tax increases on super:
the recent practice
the Commonwealth first
tax incentives for super in 1915, it allowed
tax deductions for employer contributions
and exemption from tax for superannuation
fund earnings. It had only very low tax on
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