The federal government is leaning towards matching part of Labor’s superannuation policy in next week’s budget by charging 30 per cent tax on super contributions by people who earn more than $250,000.
In its super policy announced a year ago, Labor promised to reduce from $300,000 to $250,000 the income threshold at which the tax on a person’s super contributions increases from 15 per cent to 30 per cent. The change was estimated to raise just $500 million over the first four years and $5.1 billion over a decade.
The government had modelled other scenarios, including lowering the income cut-off to $180,000, which would have raised about $1.3 billion a year. A source said that had been rejected as “political suicide”. It was now likely that Treasurer Scott Morrison will announce in next week’s budget a number similar to, or the same as Labor’s.
Sources said the government has, at the same time, ditched plans to reduce the amount of money that can be put into superannuation accounts each year at the 15 per cent concessional tax rate.
What was a great idea on super reform by the Coalition has been watered down to just a good one copying Labor, from the AFR:
So, the Coalition has now matched Labor in this reform which is good even if it has squibbed stronger reform no doubt owing to not wanting to be seen to be “higher taxing” than the Opposition.
But there are still roughly $35 billion in superannuation tax concessions in effect that will need to be reformed to make the system sustainable, including lowering the contributions concession threshold and taxing through the “pension phase”, those over 65 years of age.
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