Foundations of Taxation Law

Most developed countries have policies to ensure that their citizens can rely on some form of income in retirement. Australia has adopted a three-pillar retirement income policy consisting of a publicly funded age pension combined with privately funded compulsory and voluntary superannuation. The object of the three-pillar approach is to ensure that retirement income responsibility is shared between the Government and individuals. The age pension was first introduced in 1909 and is an integral part of the social security system. It is provided by the Government out of public funds on a means-tested basis that takes into account a person’s income and assets. To be eligible to receive the age pension, a person must meet residency requirements and have reached the qualifying age pension age (67 years from 1 July 2023). The age pension is a ‘safety net’ designed to ensure that aged persons have sufficient income to enjoy a minimum standard of living in retirement. It is intended to cover people with low incomes and insufficient retirement savings. Superannuation is a heavily regulated private savings scheme.