Minchin wants to scrap super contributions tax
Federal Finance Minister Nick Minchin has declared his support for calls to do away with the 15 per cent superannuation contributions tax.
Speaking at the Young Liberal Movement Federal Convention in Sydney, Minchin said there was justification for scrapping the “Labor tax” that raises approximately $3.3 billion in government revenue every year.
He said this would put an end to Australia’s reputation as being one of the few countries to tax contributions to retirement savings.
The Association of Superannuation Funds of Australia (ASFA), which called for the abolition of the tax in its pre-Budget submission for the coming financial year, has welcomed Minchin’s comments.
“If the Government removed the 15 per cent super contributions tax in the next Budget, given the additional net contributions and compound interest, the average wage earner would benefit by around $30 per week in retirement,” ASFA chief executive Philippa Smith said.
“The Government’s good fiscal management puts it in an ideal position to now abolish or greatly reduce the superannuation contributions tax. Improving retirement savings makes sense from an individual and broader economic perspective,” Smith added.
She described the tax as a bad one that served to dent the savings efforts of individuals and said improving the retirement savings of an ageing population should be the immediate priority.
ASFA estimates the average employee would gain an extra $610 per year in his or her superannuation balance if the super contributions tax was eradicated, which would translate to an additional $29,000 in 30 years time at the current compulsory contribution rates.
Earlier research commissioned by ASFA to support its stance regarding the tax revealed 75 per cent of respondents would prefer the removal of the 15 per cent super contributions tax as opposed to a $6 per week tax cut.
AUTHOR
Recommended for you
The Governance Institute has said ASIC’s governance arrangements are no longer “fit for purpose” in a time when financial markets are quickly innovating and cyber crime becomes a threat.
Compliance professionals working in financial services are facing burnout risk as higher workloads, coupled with the ever-changing regulation, place notable strain on staff.
The Senate economics legislation committee has recommended Schedule 1 of the Delivering Better Financial Outcomes legislation be passed as it is a “faithful implementation” of the recommendations.
Treasurer Jim Chalmers has handed down his third budget, outlining the government’s macroeconomic forecasts and changes to superannuation.
