The Federal Government has opted to ditch one of the original recommendations of the Henry Tax Review — leaving the superannuation guarantee at 9 per cent — and will increase it gradually to 12 per cent over the next 10 years.
The measure was announced by the Minister for Financial Services, Chris Bowen, who said the first increase of 0.25 per cent would occur in the 2013-14 financial year followed by a further 0.25 per cent in the following financial year and then two 0.5 per cent increases until the guarantee reaches 12 per cent in 2019-20.
He said the three-year lead time recognised that employers and employees needed to factor the increase into future wage negotiations, however it also means that it is a measure that will be an issue at a 2013-14 Federal Election.
In another key superannuation measure and one which will be introduced sooner, the Government has said it will provide a contribution of up to $500 a year into the accounts of workers on adjusted taxable incomes of up to $37,000. It said this would provide a reward for savings for low income earners by ensuring no tax is paid on superannuation guarantee contributions.
Bowen also announced that the Government would be raising the superannuation guarantee age limit from the existing 70 years of age to 75 from 1 July, 2013 allowing workers aged between 70 and 74 to be eligible to have superannuation guarantee contributions made on their behalf.
The super package has been broadly welcomed by the financial services industry but the tax package in its entirety gained only a mixed response. The super changes were welcomed by the Association of Superannuation Funds of Australia, the Investment and Financial Services Association (IFSA) and the Industry Super Network (ISN).
The ISN claimed that, over the past two weeks, the Government had “ emphatically addressed all major deficiencies in the system – efficiency, equity and adequacy”.
For its part, IFSA said the move to lift the superannuation guarantee to 12 per cent was the most significant reform in a generation.
