Treasurer Scott Morrison has today confirmed that changes to superannuation concessions are coming “very very soon”. From ABC Radio:
PETA DONALD: Scott Morrison told the association for self-managed super funds what he’s made clear for months.
Despite promises to the contrary by Tony Abbott, the Government is preparing to wind back the billions of dollars of tax concessions that go to high income earners contributing to their superannuation.
SCOTT MORRISON: Very little of what the Government puts towards super concessions goes to the bottom 20 per cent of earners.
By contrast more than half goes to the top 20 per cent…
Well, I would hope that well be able to come to a landing point on this very, very soon and if we’re in a position to make announcements on this sooner rather than later then I think the Prime Minister and I would both like to do that.
It would certainly be my hope that this wouldn’t be a matter that then would need to be revisited.
It is understood that Morrison is looking at reforming the way that superannuation concessions are distributed so that they are made more progressive. This is obviously great news and consistent with what MB has been pushing for nearly three years.
However, if reports are to be believed, the Government will not touch concessions on superannuation earnings for those aged over-60, which are currently tax free (thanks to reforms by former Treasurer Peter Costello).
Thus, the burden of reform will once again fall on the working aged population, while wealthy oldies with millions already locked away in super will be spared.
To make superannuation reform truly equitable, we need the following to happen:
- Change the superannuation contribution system so that everyone receives the same concession, such as marginal tax rate less 15%. This way, lower paid workers, who are currently penalised under the 15% flat tax system, would receive greater benefit, whereas higher income earners (e.g. those earning between $180,000 and $300,000, who receive a 30% concession currently) would receive less benefit.
- Re-instate the 15% tax on superannuation earnings for those aged over 60, bringing it back into line with those aged under 60. After all, why should a retiree earning $100,000 through their superannuation investments pay zero tax, whilst those aged under 60 and earning $100,000 via their salary pay around $25,000 in tax?
- Abolish Peter Costello’s overly generous “transition-to-retirement” superannuation rules, which assist those approaching retirement to avoid paying tax.
- Place a lifetime cap on the amount of super that one can contribute and still receive tax concessions. Superannuation must be used as a genuine retirement savings scheme, not a tax shelter.
Again, it’s great to see both sides of politics starting to address this issue. But more fundamental reform is required.
