Broader industry consensus for several months has been that superannuation tax concessions would be targeted as part of the Turnbull government’s tax reform agenda.
Most recently, big four firm EY said it’s unlikely superannuation will escape the budget’s firing line, given the government is potentially looking for “anywhere between $2 billion to $6 billion” from the super industry.
This week, Fairfax Media reported that the Turnbull government is preparing to reveal on budget night that it will cut the income threshold for taxing super contributions at 30 per cent from $300,000 to $180,000. The tax on contributions for those earning under $300,000 currently stands at 15 per cent.
The lower threshold will most likely come into effect in June 2017 when the temporary deficit reduction levy ends, Fairfax said.
Federal Treasurer Scott Morrison has been foreboding significant changes to superannuation for some time now.
Earlier this year, he said “hard decisions” lie ahead for the government, as it evaluates the purpose and effectiveness of super tax concessions.
“It’s great that people are saving for their own retirement. They do it in super and many other forms. But I believe they raise questions about the purpose of the concessions […]; certainly they boost retirement incomes to the extent that their absence would result in lower balances, arguably,” he said.
“However, what is less clear is where the concessions for high-income earners increase savings behaviour or relieve pressure on the age pension."