ACOSS has backed the announcement by the Assistant Treasurer to limit the tax breaks on super contributions for people earning more than $300 000 as a step in the right direction. The change will mean that the tax breaks for people on very high incomes will be reduced from 30 cents in the dollar to 15 cents in the dollar.
“Right now, the tax concessions on superannuation are manifestly unfair, and disproportionately benefit people on higher incomes who are well placed to look after their own retirement futures. With a total value of $32B per year in super tax concessions, it is clearly unfair that over 50% of the breaks on concessional contributions are going to people in the top 12% of income earners, and 20% is going to the top 2%. Yet, the bulk of people on low and modest incomes are really struggling to secure the super savings they will need”, said Dr Cassandra Goldie, ACOSS CEO.
ACOSS has been a strong and persistent advocate for super reform in this direction, including through the Henry Tax Panel process, and more recently by calling for tax concession reform as part of the move to increase the super guarantee from 9 – 12%. ACOSS again called for reform last week with the release of its paper Waste not, want not: Making room in the Budget for essential services.
“This announcement should be widely supported, and builds on the Government’s positive move to introduce the Government Contribution which ensures that people on low incomes are now at least not penalised by paying more tax on their super than they would ordinarily pay. We are now keen to see the Government reconsider the proposal to increase the cap on concessional contributions from $25 000 to $50 000 for people with savings of less than $500 000, as this is most likely to benefit the people who are already doing very well out of the tax breaks on super,” said Dr Goldie.
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