Subscribe to our newsletter

FSC calls for 20% super tax rebate

FSC calls for 20% super tax rebate

Tim Stewart
— 1 minute read

Superannuation contributions should be taxed at an individual’s marginal tax rate with a 20 per cent rebate, says the Financial Services Council (FSC).

The FSC released modelling by PwC yesterday showing that a 20 per cent rebate on the marginal tax rates for super contributions would be budget-neutral.

But the budget-neutral status of the proposal is dependent upon the superannuation guarantee following current legislation and rising to 12 per cent by 1 July 2021.

If the superannuation guarantee were instead frozen at its current rate of 9.5 per cent, there would be a decrease in tax receipts of less than $1 billion to $4 billion, according to the PwC modelling.

The change would see those on the highest marginal tax rate (45 per cent) paying 25 per cent on their super contributions, whereas those earning less than $37,000 a year would pay no tax.

Currently, all super contributions (up to the concessional contributions cap) are taxed at 15 per cent, with the exception of individuals who earn over $300,000 and are taxed 30 per cent.

FSC chief executive Sally Loane said both a 12 per cent superannuation guarantee and a tax rebate of 20 per cent are required to increase the numbers of self-funded retirees across “low to middle-income Australia”.

“Other models actually decrease savings across every income group, leaving people worse off and putting even more pressure on the age pension. This is not sustainable,” Ms Loane said.

Ms Loane said the debate on super has been “hijacked” by parties who are more interested in “raiding superannuation to fund other projects or policies”.

“[These parties are] not in helping super meet its objective of removing pressure on public purse and ensuring Australians can enjoy comfortable, adequate retirements,” she said.

In November 2015 thinktank The Grattan Institute recommended limiting pre-tax contributions to super to $11,000 a year, as well as implementing a 15 per cent tax on super earnings.

Financial services consultant Deloitte recommended a 15 per cent discount on the marginal tax rate for superannuation contributions in October 2015.

Read more:

Don't be 'too concerned', says AMP Capital

Oil on track for worst quarter yet: Saxo

HESTA invests in community housing

ME Bank announces new chairman 

 

FSC calls for 20% super tax rebate
investordaily image
ID logo

related articles

promoted stories