Retirement
Opt-out super mere ‘tax grab in disguise’
NSW workers would be slugged an extra $1.3 billion in tax per year if the radical plan to scrap compulsory superannuation for low-paid workers was approved.
Opt-out super mere ‘tax grab in disguise’
NSW workers would be slugged an extra $1.3 billion in tax per year if the radical plan to scrap compulsory superannuation for low-paid workers was approved.
Industry Super Australia (ISA) has calculated the figures in response to the proposition put forward by backbench Coalition MPs that would allow workers paid less than $50,000 to opt out of superannuation and take the money as wages.
The ISA said the average NSW resident who is earning less than $50,000 would be hit with a tax bill of $1,000 a year more as a result of any changes.
It also pointed out that workers in the federal electorates of Sydney, North Sydney, Grayndler and Kingsford Smith would be hit the hardest by the extra tax.
This is because wages are taxed at a higher rate than super contributions, ISA pointed out, which is more than double in most cases.
It expects more than 1.3 million people to be affected if the plan was to go ahead.
It’s reportedly being considered as part of the current Retirement Income Review.
As well as seeing low-paid workers losing money to tax, the plan would “demolish” the retirement savings of affected individuals, ISA has indicated.
“A 30-year-old working mum earning $50,000, who takes time out to raise children, would lose almost $300,000 from her super at retirement and pay more than $61,000 extra in tax,” it said.
Similarly, it highlighted that “a 30-year-old man on $50,000 – who has a continuous career – will lose a staggering $533,000 from their retirement savings and be lumped with an extra $113,000 tax bill over his working life”.
Industry Super Australia chief executive Bernie Dean called the proposal “dangerous” and said it would condemn more than 1 million NSW workers to poverty in retirement.
“The numbers don’t lie. Opt-out super is a blatant tax grab that would be used to prop up the government’s budget bottom line, at the expense of hardworking NSW workers’ retirement savings,” he stated.
Calling it bad for the economy and bad for NSW, Mr Dean said “local NSW MPs need to call out this proposal for what it is or explain to their constituents why they support them paying more tax for no gain”.
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