Treasury has pushed ahead with proposals to refund tax paid on superannuation contributions for workers earning $37,000 a year or less.
The government estimates around 3.5 million Australians get no tax benefit from contributing to superannuation, due to the 15 percent superannuation contribution tax being at or below their income tax rate.
Assistant Treasurer and Minister for Financial Services and Superannuation Bill Shorten published a discussion paper that outlines the proposals yesterday.
"The Gillard Labor government firmly believes that Australian workers, whatever their income, deserve just rewards and financial security in retirement," Shorten said.
From 1 July 2012, the government will refund the taxation on the 9 per cent superannuation guarantee (SG) back into the member's super fund.
The Australian Institute of Superannuation Trustees (AIST) today said it was a much-needed measure to close the retirement savings gaps in Australia's $1.4 trillion retirement incomes system.
"This measure is all about giving low-income earners a fair deal," AIST chief executive Fiona Reynolds said.
"Currently, 3.5 million Australians get no tax benefit from contributing to superannuation due to the 15 per cent super contribution tax being at or below their income tax rate," she said.
Reynolds said the measure would particularly benefit women, many of whom work part-time.
"While the co-contribution system has worked well for low-income earners, a lot of people can't afford to make the most of this system because it requires a voluntary contribution on their behalf."
"By contrast, the low-income rebate is a direct boost to the retirement savings of low income earners and should provide many thousands of dollars extra at retirement," she said.
