Democrats offer Government deal on super package
The Australian Democrats have today proposed major changes to the Government's $640 million superannuation tax incentives package as part of a deal to allow the package to be passed through the Senate.
However the moves have been criticised by the Labor Party who says it is “a spectacular backflip” by the Democrats and would benefit the rich with a tax windfall and leave many others with no real benefit.
At the last election the Government indicated it would introduce changes to superannuation worth $640 million through cuts to the superannuation surcharge for high income earners and the introduction of Government funded co-contributions for those on low incomes.
But these moves have been resisted by both Labor and the Democrats, with the later proposing today the incentives for low income earners be doubled while the tax cuts for high income earners are halved.
The Democrats are set to push for the changes in meetings with the Government this week ahead of a debate on the Government’s proposals scheduled for October.
"The Democrats want the cut in the high income earners’ Superannuation Surcharge to be halved, and the savings redirected to doubling the funding for the new Government Co-contribution for low income earners," Democrats spokesperson on superannuation John Cherry says.
"Under our plan, up to a million additional Australians earning up to $40,000 a year would become eligible for the Government's $1000 co-contribution for making voluntary payments into super.”
The original moves by the Government proposed a $1000 co-contribution to be paid on a dollar for dollar basis for voluntary superannuation payments made by people with incomes of less than $20,000.
The Democrats however plan to extend this offer to those on higher incomes, with those earning between $20,000 and $40,000 to receive a 50c Government contribution for every dollar they put voluntarily into a super fund.
To fund the increased co-contribution, the Democrats would halve the Government's proposed cut in the superannuation surcharge from 4.5 per cent to 2.25 per cent over three years.
But Labor Senator Nick Sherry says the cuts to the surcharge are still ineffective and apply only to those on more than $90,500 per year.
Sherry says the surcharge should remain and any savings derived from it should be used to fund across the board cuts to the 15 per cent superannuation contributions tax.
Sherry goes further to say that the Democrat moves guarantee only the rich a tax cut.
According to figures from the Treasury department, 75,000 Australians will receive the full co-contribution under the Government’s proposals, but Sherry says this is out of more than 5 million working Australians who may not be eligible due to the pressures of having to use their salaries to meet other financial commitments.
AUTHOR
Jason Spits
Recommended for you
The FSCP has announced its latest verdict, suspending an adviser’s registration for failing to comply with his obligations when providing advice to three clients.
ASX-listed platforms HUB24, Netwealth, and Praemium have used their AGMs to detail how they are using artificial intelligence to improve their processes and the innovative opportunities it presents.
Having sold Madison to Infocus earlier this year, Clime has now set up a new financial advice licensee with eight advisers.
With licensees such as Insignia looking to AI for advice efficiencies, they are being urged to write clear AI policies as soon as possible to prevent a “Wild West” of providers being used by their practices.
