Sent: 13-11-2012 11:59:02
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Henry Ergas Article
The last time I wrote in this publication I mentioned a very important article by Henry Ergas (http://www.theaustralian.com.au/opinion/columnists/strangling-super-goose-to-get-its-egg/story-fn7078da-1226495697819 - subscription required)
Ergas' article is complicated, I agree, but it contains a handy analysis on how tax policy needs to be judged.
He told me, via an email exchange that his approach - that he simply looks at the end result comparing no super tax and the end result with tax. Further he commented that economic literature since the 1970s has said that this is how such comparisons have had to be done.
Some of you might re-call the tax environment that applied to super before July 1983. All tax-free except 5% of lump sum withdrawals were taxed at marginal rates. Based on the above view this seems a much fairer system.
I wonder if this type of analysis might make the Treasury's Tax Expenditure Statement redundant. It leads to
Either way with the recent CPA research showing people are using super to take on more debt, this is the type of debate we need to be having. What's the purpose of super if it isn't tax effective?
The Essential SMSF Guide
My book which I first self-published in 2009 will now be published by Thomson Reuters as 'The Essential SMSF Guide". Thomson Reuters are responsible for distributing the book (which is now up to date to 30 June 2012). The book has been endorsed by the Institute of Chartered Accountants. Further details are available here:
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