Superannuation Tax Breaks Lost in 2012 Budget
The Federal Government intends to increase taxes on superannuation contributions of Australia’s high earners to avoid a surplus for its May 8 budget.
If this pushes through, there will be more than $30 billion superannuation tax breaks affected. And as the review committee on expenditures is going over the final budgets, a reduction of other benefits is also being considered.
According to reports, the labor department is eyeing to make these changes for high-income earners who only contribute to about 15 percent of their super. Low-income workers, on the other hand, should not be affected by any of these plans.
Since Labor adapted a super guarantee levy in 1993, tax breaks risks have increased to billions of Australian dollars. This year, the government has passed a new legislation wherein employers are required to increase their super contributions from 9 percent to 12 percent until 2020. But it is still not decided whether this will be based on company profits or employee wages.
Bill Shorten, the Financial Services Minister, said that this increase is supposed to be a “deferred wage increase” that employers need to discuss with their workers. He added that superannuation is part and parcel of an employee’s remuneration.
Unions are not in favor of this, however, as they demand employers must absorb the whole cost of this contribution.
The Greens are pushing for the tax on super funds to be based on the individual worker’s income tax rate, less 15 percent. This invariably guarantees low-income earners as tax-free.