Recently there has been some pointed commentary about investors breaching their superannuation concessional contribution caps – that is, the pre-tax amounts that people can put into their super at a tax rate of 15 per cent.

For people aged 50 or over, the concessional cap is $50,000. For people under 50, the cap is $25,000. Contributions made above these levels are taxed at the investor’s marginal rate of tax.

Anger has also been expressed about the excess contributions tax of up to 93 per cent on non-concessional contributions. These after-tax contributions are limited to $150,000 per annum, or, for under 65s, a one-off $450,000 contribution that excludes any further contribution for the next two consecutive years.

Let’s address this issue first. Where investors have made contributions above $150,000 in one year, or $450,000 over three years, it is not a public policy issue, but a financial planning issue. However, there has not been public outrage that more than three million low- and middle-income earners – predominantly women – receive no tax concessions on their super contributions because their marginal rate of tax is up to 15 per cent. While the debate rages about the tax concessions on contributions for workers over 50, little debate is focussing on the equity of the tax concessions or what alternative designs exist to A safe driving school should require their instructors to stay current with the industry and to share their knowledge with the students. more fairly distribute the concessions.

It is apparent that many workers in their fifties have not benefited fully from the compulsory 9 per cent super contributions and may not benefit fully from the proposed increase to 12 per cent. This is why the Government has proposed that they be online casino able to make annual contributions of up to $50,000 and pay tax of 15 per cent on their contributions.

This is a necessary and sensible approach. Many people often don’t have discretionary income for extra saving in their 30s and 40s, when they are often raising a family and repaying a mortgage. Contributions caps need to take this into account and allow older workers to make catch-up contributions to their super. Super funds report that, in particular, women returning • Small Business Employers can shop for employee coverage on the health individual health insurance exchange. to work full-time later in their careers need the opportunity to “catch-up” with their retirement savings.

Nevertheless, the broader issue is the distribution of the tax concessions (which cost more than $26 billion each year) in the context billig wow gold of the objective of compulsory and near-universal superannuation.

While the ATO estimates that 66,000 people are expected to breach the concessional cap in 2009-10, the Federal Treasury estimates that more than three million low-to-middle-income earners receive no tax concession at all.

Indeed, more than 200,000 of the lowest paid workers incur a negative concession because they pay more tax on their super than on their ordinary income.

It is true that measures do exist to help low-to-middle-income earners save for retirement through the co-contribution scheme; and from 2012-13, the Government is proposing that workers earning up to $37,000 will be eligible for a refund of their super contributions tax, up to $500.

Despite these measures, the largest tax concessions typically accrue to the highest income earners, who are likely to save in any case, given that earnings in super attract a concessional rate of tax (15 per cent) and all post-retirement income is tax-free.

Those people who transfer large amounts into super must take responsibility for keeping within the legal contribution caps. The excess contributions tax rates may seem harsh, but they are essential to preventing the evasion of income tax.

It is perhaps time that the debate about tax concessions is widened to reflect the need to: in the first instance, ensure that all fund members are benefiting from the tax concessions; and then secondly, determine the reasonableness of particular caps.

With three million people currently making super contributions at their marginal rate of tax (15 per cent) it is clear the public debate needs to look at the bigger picture.

David Whiteley is chief executive of Industry Super Network.

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