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Fresh super tax proposal gains pace

The Financial Services Council has joined calls for a super tax rebate to be introduced, as a former Association of Financial Advisers president makes headway with government.

 

In December last year, principal at Paramount Wealth Management, Wayne Leggett, said that instead of concessional contributions being tax-deductible, they should be subject to a tax rebate.

This week, the FSC said superannuation contributions should be taxed at an individual’s marginal tax rate with a 20 per cent rebate.

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The FSC released modelling by PwC on Wednesday showing that a 20 per cent rebate on the marginal tax rates for super contributions would be budget-neutral.

However, the budget-neutral status of the proposal is dependent upon the superannuation guarantee following current legislation and rising to 12 per cent by 1 July 2021.

If the superannuation guarantee were instead frozen at its current rate of 9.5 per cent, there would be a decrease in tax receipts of less than $1 billion to $4 billion, according to the PwC modelling.

The change would see those on the highest marginal tax rate (45 per cent) paying 25 per cent on their super contributions, whereas those earning less than $37,000 a year would pay no tax.

Currently, all super contributions (up to the concessional contributions cap) are taxed at 15 per cent, with the exception of individuals who earn over $300,000 and who are taxed at 30 per cent.

Speaking to nestegg.com.au's sister publication SMSF Adviser, Mr Leggett said he recently met with Western Australia’s federal member for Swan, Steve Irons, to discuss the proposal.

Mr Leggett said Mr Irons, who is in “close contact” with Assistant Treasurer Kelly O’Dwyer, will be discussing the idea with government.

Fresh super tax proposal gains pace
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Neil - I retired about a year ago and now I've got less income than I planned for. Can I sue my financial planner?....
Joe - Agree with Terry Dwyer. The really nasty part is the way it will hit self funded retirees (through their SMSF in many cases) who have direct shares.......
John - Not sure loss of 30% of income is something I just let go. Options I will be doing is investing overseas, local and international REITs and seeing if.......
Dr Terry Dwyer, Dwye... - I am amazed by these comments. The effects will be subtle but pervasive. It will have a huge effect on superannuitants in pension mode as with low.......