Lines drawn in super concessions stoush

A proposal by the Labor Government and Greens to cut superannuation tax concessions for higher income earners has drawn fire from the Opposition and industry associations.

Australian Greens leader Bob Brown yesterday (Monday 6 February) released the Greens’ proposal to be put to the Superannuation Roundtable recently established by the Government.

“The Greens had detailed discussions with the Government about the revenue going to superannuation as part of the mining tax package, and the need to review superannuation tax concessions. We need to make the system fairer,” Senator Brown said in a statement.

“Fixing a system so skewed towards high-income earners could go a long way to lift overall levels of savings. Current rules do nothing to ease the growing gap between the rich and poor.

The Greens’ plan would see superannuation taxed at a person’s marginal tax rate minus 15 percentage points. Currently all contributions are taxed at a flat rate of 15 per cent.

However, the Self-Managed Super Fund Professionals’ Association of Australia (SPAA) believes cutting superannuation tax concessions for higher income earners would be “unwise”.

SPAA says incentives to save through superannuation must be retained to enable all Australians to adequately fund their retirement

“We are reiterating the urgent need to support those Australians nearing retirement through raising excessively low contributions caps and dealing with the harsh consequences of excess contributions tax (ECT) instead,” noted Andrea Slattery, SPAA CEO.

SPAA dismissed Senator Brown’s proposal that Government introduce a scaled tax on superannuation contributions based on an individual’s marginal tax rate and contention that this would add to net Federal revenue.

It argues that the statistics quoted by Senator Brown are outdated and no longer relevant, adding that there is no evidence to suggest tax concessions to high-income earners are a net drain on the Budget.

“Rather than focusing on penalising those who are saving through the community pillar of superannuation for an independent life post-working age, the Government should turn its attention to the considerable ongoing barriers to all Australians saving adequately for their retirement,” said Slattery.

Senator Mathias Cormann, Shadow Minister for Financial Services and Superannuation, called on Superannuation Minister Bill Shorten to clarify the government’s plans to increase taxes on retirement savings.

“There is already widespread concern that Labor’s Superannuation Roundtable announced by Bill Shorten a week ago is nothing more than a Trojan horse for its secret tax agenda on superannuation,” he said.

“When called on last week to rule out further tax increases on superannuation Bill Shorten responded with a deafening silence.”

The Superannuation Roundtable will cover a variety of issues including the new higher concessional contributions caps for individuals aged over 50 and who have less than $500,000 in superannuation.