The government will not proceed with Labor’s plan to grant tax concessions to retirement income derived from deferred lifetime annuities (DLAs).
Under Labor’s proposed legislation announced as part of the 2013-14 budget, DLA earnings would have received the same tax concessions that investment earnings on superannuation assets currently receive.
But while the government has said it will not proceed with these measures, Assistant Treasurer Arthur Sinodinos said, “The government will soon consider the unnecessary barriers to the development of longevity insurance products, as part of a broader review of the regulatory arrangements for retirement income streams.”
The scrapping of the policy comes as part of a review of 92 pieces of taxation and superannuation legislation that former governments had announced but not legislated.
Senator Sinodinos announced on Saturday that the government would proceed with 16 of the measures announced by the Rudd, Gillard and Howard governments, and scrap 48.
Superannuation measures that will proceed include one providing greater certainty in relation to fund mergers; one that introduces penalties for promoting schemes designed to obtain the illegal release of superannuation benefits; and one that gives the Australian Taxation Office flexible and cost-effective penalty options to deal with SMSFs that breach the law.
Scrapped measures include one that ensures that trust deed clauses cannot be used to prevent excess amounts from being counted as contributions; and the legislation designed to encourage the take up of DLAs.
Financial Services Council chief executive John Brogden welcomed the changes.
“Within the constraints of the government’s budget conditions these changes provide certainty on a number of important measures,” he said.
“Over the past few years the industry has been 110% focused on red tape and regulation at the expense of innovation and developing Australia as an exporter of financial services.
“The Assistant Treasurer’s statement has provided certainty and clarification on tax and superannuation announcements from the Howard and Rudd/Gillard governments and will be a boost to confidence within the industry.”
Written by James Fernyhough for the Financial Standard.