Tuesday, 9 February 2016

Will the Turnbull Government finally eliminate those overgenerous superannuation tax concessions for the wealthy?

Is talk of make superannuation policy fairer just part of the political spin in the lead-up to this year's federal election spin or will the Turnbull Government genuinely commitment to removing overgenerous superannuation tax concessions for the wealthy?

In 2015 Australian Treasurer Scott Morrision put superannuation tax concessions for the high-income earners on the table - signalling the possibility of cuts to tax concessions for this group.

By January 2016 Morrison was holding to this position with qualifications.

Public expectation began to build that the Turnbull Government would at last address those tax loopholes in the national superannuation scheme which allows high-income earners to use super as a form of tax avoidance or as estate planning, but leaves ordinary workers paying higher levels of tax on their own super.

An article in The Australian on 3 February 2016 contained this information on government policy relating to tax breaks for the wealthy and the current public mood:

More than 60 per cent of voters support increasing the tax on superannuation contributions for high-income earners in a Newspoll that will buttress plans by the Turnbull government to strip back the generosity of tax breaks on compulsory savings…..

Treasury estimated last week that the tax breaks on superannuation contributions would cost the government $16.2bn in tax revenue this year, or almost half the projected budget deficit. The concessional treatment of superannuation earnings costs the budget a further $13.6bn…..

Treasury has been pressing for a tightening of superannuation tax concessions since 2008. It estimated that in 2012-13, people on the top tax bracket were gaining concessions on contributions worth an average of $4900 a year while people on the bottom two tax rates got concessions of $320.

The response from the Turnbull Government was expected to fall in with the public mood and further announcements were anticipated.

Unfortunately, by 5 February an unnamed source in Canberra had let it be known that the government also has the Super Guarantee in its sights and intends to permanently halt increases in the amount of compulsory superannuation contributions paid by an employer into a worker's superannuation account.

If this comes to pass then an est. 11.5 million workers (based on 2015 figures) currently below retirement age will have less money to live on in their eventual retirement years and their employers with potentially more money in their own personal retirement kitty.

Broken down by gender that's an est. 6.1 million men and 5.3 million women (including in excess of est. 90,000 couples) with less retirement savings in their pockets to meet their living expenses when their working life ends. 

Prime Minister Turnbull has since denied there will changes to the Super Guarantee - or did he?

However he did not deny the move was up for discussion, saying: “What is happening at the moment is that we’re having a very lively debate about tax and economic reform and so all sorts of proposals are swirling around.”

Somehow I'm not feeling confident this denial will last because I'm not sure that this particular federal government understands the real meaning of 'a fair go for all'.

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