Treasurer defends super tax
Federal Treasurer Peter Costello has again hit back at calls to abolish the 15 per cent superannuation contributions tax, this time claiming tax rates applying to retirement savings were already at sufficiently concessionary levels.
In an interview on commercial radio in Sydney, Costello used suggestions for the Government to raise the superannuation contribution age limit to justify the current amount of tax levied on superannuation.
“If it was so horribly highly taxed three times, why would people be desperately trying to put money into it?” he asked.
“This illustrates the fact that superannuation is not taxed highly. In fact, it is taxed very concessionally and taxed so concessionally that people want to put more money into it,” the Treasurer added.
The comments follow statements by the Treasurer last week that a slashing of the contributions tax, an idea endorsed several weeks ago by Finance Minister Nick Minchin, could raise interest rates.
In regard to the super contribution age limit though, currently capped at 70, Costello did not rule out an easing of this restriction.
“It is assumed that on average people after the age of 70 will be in retirement. Now as you rightly point out, longevity is increasing, people now are working to 65 and beyond,” he said.
“If we get to a stage where there is an expectation or a wider pattern of people working into their 70s, obviously this will have to be reviewed…I have put it up in recent years and as patterns change it could well go up further,” Costello explained.
However, the Treasurer stipulated the Government was intent on avoiding the situation where the age limit allowed Australians to use superannuation as an estate planning vehicle.
“We will not allow them to use superannuation to build an estate which can be passed on to their children. It is to support somebody in retirement. And so there has always been an actuarial calculation as to at what age you would assume a normal person would have saved enough to go onto their retirement income. It used to be 55, [then] put up to 60, put up to 65, put up to 70,” he said.
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