Push for fairer super tax benefits
Herald Sun
September 22, 2009 12:00am
- Small part of fund members get tax benefits
- Industry funds propose changes
- Who gets your super when you die
WEALTHY Australians would lose a raft of tax benefits under sweeping changes to the superannuation system proposed by powerful industry funds.
In a submission to the Federal Government's Henry review of the tax system, the funds propose simplifying the system by rolling most tax concessions into one government payment.
"Five per cent of individuals get 40 per cent of the total tax concessions," said Industry Super Network executive manager David Whiteley.
"That's clearly not what the intention of the system is."
Industry Super Network modelling shows that every $1000 pumped into super by someone earning $180,000 a year reaps tax concessions worth $315, while the same contribution made by a person earning $15,000 gathers concessions worth just $15.
Mr Whiteley said the industry funds' proposal would see all Australians get a tax break on their super."If you were to reallocate the tax concessions to give them a tax concession that would give them more when they retired it would also reduce their reliance on the Aged Pension," he said.
The proposal gives most to those earning less than three quarters of the $60,000 average wage -- about half Australia's workforce -- while those on three times the average wage would see their retirement income cut.
Mr Whiteley said the wealthy would continue to save.
"They're still going to get the benefit of a lower tax on earnings and being tax-free when they retire," he said.
The funds want to abolish four tax concessions: salary sacrifice, the low-income co-contribution scheme, the tax deduction for extra super contributions and the spouse contribution offset.
They also want the superannuation contribution tax abolished, with all contributions - including employer super - instead coming from after-tax income.
To make up the difference, all workers then would receive a co-contribution or tax offset from the government of between 25 per cent and 33 per cent, paid directly into their fund.
The Government contributions would be capped at between $4000 and $6250 a year.
Treasury Secretary Dr Ken Henry's review of the tax system is due to report in December.
