Evaluation of Taxation of Australian Industry Superannuation Funds
- Publication Type:
- Thesis
- Issue Date:
- 2019
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The objective of this dissertation is to evaluate the incidence of taxation in industry superannuation funds. In the long-term, the Australian Government relies on Superannuation funds to adequately provide working Australians with enough money to fund their retirement, thereby contributing significantly to Australia’s three pillar retirement income system (AFTS, 2008). However, concerns have been raised in separate government reviews as to whether funds are managing taxation effectively, and thereby maximising after tax returns to members (Cooper et al., 2010; Productivity Commission, 2016). Conversely, in the short-term, the Government relies on tax payments to contribute to overall government revenues. Industry superannuation funds are economically significant with assets under management in excess of $630 billion, generating pre-tax income of $47 billion annually (APRA, 2019). At present, governments are concerned with declining tax revenues (U.S. Congress, 1999; Levin, 2013) and this may be exacerbated by concerns expressed in the media about the tax practices employed by industry superannuation funds which have been identified in various ‘leak documents’ (i.e. Luxembourg Leaks, Panama Papers and Paradise Papers). Critically, these issues appear to have competing objectives and therefore provide tension to evaluate taxation of industry superannuation funds. Collectively, this dissertation provides the first empirical evaluation of taxation in industry superannuation funds in an attempt to address these issues. First, attention is directed to whether industry superannuation funds adopt tax aggressive practices to potentially benefit members of the fund. Second, attention is given to whether industry superannuation funds manage the incidence of tax effectively in a complex tax environment. There is little conclusive evidence of tax aggressiveness, and while there is variation across the taxation reported in the financial statements of industry superannuation funds, there is little statistically significant evidence of effective tax management. However, effective tax management has recently become a regulatory requirement, and will likely become observable in the future.
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