Labor puts super on the table - a real budget measure
He also said Labor planned to fight the next election on superannuation, saying the Abbott government's second budget showed tax concessions on super earnings had become the fastest growing tax concessions and someone had to start winding them back.
He said super tax concessions were estimated to grow to $50.6 billion in 2018-19, up from $29.7 billion in 2014-15, at an average annual growth rate of 14.3 per cent.
The government's recent budget shows the cost of the aged pension will be $50.4 billion in 2018-19, up from $41.6 billion in 2014-15, at an average annual growth rate of just 4.9 per cent.
"This is exactly why the earnings concession on superannuation is the fastest growing tax concession in the federal budget," Mr Bowen said.
"That rate of growth dwarfs the increase in the scale of age pension costs."
"I read that Tony Abbott wants to make superannuation an election issue. Bring it on. Labor is always delighted to fight an election on superannuation, one of our proudest creations," he said.
Labor wants to improve the Budget bottom line by an additional $14 billion, by tightening unsustainably generous superannuation tax concessions, subsidised by Australian taxpayers to those who already have millions in their accounts. ?#budgetreply?
Yes please do those. Who run their own SMSF will of course not vote for labour . That's another 2 million votes .,,
When you say improve the bottom line by 14 billion you are saying this is going to come from People who are saving for their retirement and already pay tax on input and earnings ..,
Mr Bowen said the Government's budget papers showed the cost the concession was set to double to more than $30 billion in the next four years.
He said superannuation assets were projected to reach more than 160 per cent of GDP, up from just over 120 per cent today.
Meanwhile, tax-free superannuation assets in retirement phase, which count for about 30 per cent of total superannuation assets today, were expected to grow to 44 per cent in the next 30 years.
"That's exactly why the earnings concession on superannuation is the fastest growing tax concession in the entire federal budget," he said.
"The rate of growth dwarfs the increase in the scale of the age pension."
In his budget reply speech, Mr Bowen said Labor would back savings measures worth $2.4 billion, including changes to the tax on working holiday visa holders, the abolition of the large family bonus and the removal of the zone tax offset for fly-in, fly-out workers.
http://www.abc.net.au/news/2015-05-20/labor-vows-to-cut-superannuation-tax-concessions/6485062
Fantastic keep it up , another landslide coming up...
"Shadow treasurer Chris Bowen has ruled out reviving Labor's unsuccessful and politically corrosive mining tax under a future Shorten Labor government but has committed the ALP to putting a fully formed carbon pricing policy before voters at the next election.
The policy on carbon pricing, which is likely to begin with a floating market-set price without a fixed price period, will nonetheless hand the Abbott government a politically fertile line of attack on the ALP over the incendiary carbon tax issue.
Clarifying his party's stance on the two taxes that together helped Tony Abbott win the 2013 election, Mr Bowen said the world had changed since 2010, rendering a mining super-profits tax no longer relevant."
Good luck with the carbon pricing Mr Bowen!
SABRA LANE: The Opposition is proposing that retirees will lose their tax-free status on annual superannuation earnings above $75,000. That would only affect people who have a super balance in excess of $1.5 million. It will also apply a 30 per cent contribution tax rate to those people earning above $250,000 a year. Together, the measures will save $14 billion over a decade and affect about 110,000 people.
The Prime Minister's declaration of no changes to superannuation under a government he leads this term or next comes despite the financial services inquiry, the Government's taxation discussion paper and its new Treasury secretary all warning the current system is unsustainable. And the reason for it is pure politics. The Government believes its argument that Labor's ready to take money out of seniors' pockets to pay for its policies will be potent at the polling booth. It also believes the message about people being rewarded for saving for their own retirement will resonate strongly.
But seniors are frustrated it's become a political football. They believe superannuation should be reviewed, together with the adequacy of the pension and they've lobbied for an inquiry of the entire retirement income system.
There are no concessions on savings for ones retirement just tax ,,which labor wants to raise. It is Orwellian to call raising tax on savings . An improvement.it is tax ..
the more you tax savings for old age the more people will be on the pension at a cost to taxpayers ..It is false savings.,,
The tax concessions that Costello gave to the well off are part of the Howard structural deficit that is hurting our budget. A reduction in tax is a tax concession any way you look at it. Tax free is not a concession its lragesse writ large.
But there are also potential tax savings from non-concessional or after-tax contributions, says Kate McCallum of Multiforte Financial Services.
“The thing to focus on is the environment that your money is invested within,” she explains.
“Compared with investing post-tax money into an investment in your own name, investing via super is taxed at a maximum of 15 per cent on earnings and 10 per cent on capital gains; and for those eligible for transition to retirement, their money grows in a zero tax environment.”
What’s more, she says, the contribution forms part of your “non-taxable component” within super – which for people starting transition to retirement pensions before age 60 means that this portion of their income is tax-free.
How many members here or anywhere have 1.5 million in their super which is the target area of the Labor policy ? Family trusts and similar funds should be looked into as well for tax avoidance instead of the stated aims of the trusts.
Yes, the family trusts should definitely be looked into. How many politicians would want that to happen?
There,s the rub Radish and same with nagative gearing.
Labor went done the road re negative gearing...think it was in Keating's time...it was dropped.
Liberal senator Arthur Sinodinos, who since leaving the executive, has become the intellectual conscience of the government, described the decision on super as "strategic". In other words, its aim is market differentiation from Labor which has exposed itself to the charge of being a high-tax party by proposing to rein in the burgeoning cost of generous super tax concessions,. That Abbott so quickly sniffed out the populist angle, despite widespread agreement that the superannuation tax concessions are out of control – overtaking the cost of the age pension within the current budget period – speaks to his new mindset.
Liberals have noted that the decision, which forfeits potentially billions in revenue, never went to cabinet or the party room. It comes on top of similar pledges against changes to capital gains tax, and the GST.
Beyond the "captain's call" aspect, the proscription of super tax by fiat has revived another bad memory for Liberals: that of a rampaging Tony Abbott in 2013 ruling out anything that might stand between him and victory, such that he had to break promises the moment he got into government.
At the moment the more money a person earns, the more they can put into their super account which means the more they’ll get a discount on the tax they would have paid if that money had been spent normally.
And the larger the tax discount such a person receives the more the less wealthy will have to pay for government services.
Superannuation tax concessions are set to reach $50 billion a year by the end of the federal budget’s forward estimates,.
And well, that’s slightly more than the government’s entire spending on pensions in that year.
This government's taking from the poor to give to the rich does not make economic sense to me.
To suggest a change in the super tax concessions will force millionaires onto the age pension is a furphy.
From a graph I saw the other day there are only about 1% who are the mega rich.
Good on Labor for planning responsible action. Geo is right, the Howard government created this unsustainable situation. As is their want though, the LNP will twist the truth and try to convince everyone who has superannuation that they are in some sort of danger. My understanding is that it is only those who are already retired and have so much money in super that their investments are earning $75,000+ per annum income that will be taxed 15% only on the dollars earned above the $75,000 which is not taxed. In my view anyone affected by such a measure who protests paying this small amount of tax on earnings above $75,000pa is out and out GREEDY.
Superannuation tax expenditure – that is, what the various super tax breaks cost the budget – will soon match the cost of the actual pension and do very little to reduce pension costs.
So, with no-one else apparently willing to nail the core objectives of our massive superannuation tax expenditure to parliament's door, let me be so bold as to suggest this:
"The tax system should support and encourage superannuation savings up to the point of making people independent of the government age pension."
Simple, isn't it?
The tax on savings in super means the final amount is reduced by 30 to 40 per cent simple isn't it we should not tax savings for old age...
That's what operating on the principle would do.
There could still be room to encourage a little more saving for the national good and comfort than the bare minimum. The cap could err on the generous side.
Equity in the system could be restored by simply making all the tax breaks – on contributions, on earnings within the fund and on payments by the fund – a 15 percentage point discount to whatever the individual's marginal tax rate might be.
It's simple, it's based on principle – and watch the pollies run from it.
The Abbott/Hockey performance on super has been egregious. Labor's suggested changes are still in the tinkering category, well short of defining and sticking to principles.
You see, occupying the treasury benches is much more important than what's best and fair for the nation.
From the article I linked in my last post.
You are asking for those on the higher tax bracket to double the tax they pay on their own savings for old age.
The overly generous super concessions mostly benefit the wealthiest who will have no need to apply for the age pension.
Blind Freddy can see that but it seems some can't.
Yeah have to agree with you Gerry
Hopefully those coming behind will have enough in their accounts (if they pay in more than they have to that is) to be fully independent of the taxpayer.
Currently the government collects tax on money that is invested into superannuation in three ways.
There is the "contribution phase" in which attracts a tax rate of 15 per cent.
This is currently capped at $30,000, or $35,000 for people over 50.
While you are still working, income on which tax has already been paid can also be transferred to superannuation. These after-tax contributions are currently capped at $180,000 a year and is NOT eligible for the contribution tax concession.
Thehe "accumulation phase" is a benefit that applies to earnings from investing both pre-tax contributions and after-tax contributions. Earnings from investing any money in your superannuation account are taxed at 15 per cent.
In the "retirement phase" when you are over 60 and living off your superannuation your income is tax free
But tax can be levied on any investment income you make, and when returned to you from your investment accounts.
So the minimum tax payable on Superannuation is taxed at 30% plus more to those who make after tax contributions which seems fairly comparable to income tax rates.
IMO
If the Government keeps interfering with the Superannuation, people will stop using it and only the compulsory contributions will be made which will result in a lot more people getting the pension, keeping the remainder under the mattress for gamling and going on holidays.
Why not adjust the Super for the Politicians and Public Servants - everybody should be under the same scheme.
In addition to Abby's points are the facts that no one pays into their own super but your employer does.
You cannot salary sacrifice without your employer agreeing and doing it for you. There is an additional cost to the employer as your salary is tax deductable as a business expense or what the lefties would call negative gearing...
If you are over 55, the combination of salary sacrificing pre-tax income into super and drawing an income from super benefits can be very tax effective.
Not only does it get more into your super fund but your cash flow remains the same. You first have to start a transition to retirement (TTR) income stream funded from your super fund. A minimum income of 4 per cent and a maximum of 10 per cent must be drawn from the account balance each year.
You then also start a salary sacrifice arrangement with your employer so part of your pre-tax salary is redirected into super. Centric Wealth’s Panagis says replacing salary with superannuation income and redirecting salary to super will “improve net income, reduce taxation and increase the end retirement benefit”.
The income tax reduction comes about thanks to receiving less salary income (and therefore paying less tax) and more concessionally taxed pension income.
On top of that, salary sacrifice super contributions are subject to 15 per cent tax, which means much more goes into super than if you contributed after-tax income.
Once you turn 60, you receive the whole income stream tax-free.
From the Afr link posted earlier by me.
Thank you for that Geomac, I found it a very informative read
Pete there is no extra expense to the Employer basically the Employer is just paying the same Business Cost of an Employees normal gross wages and splitting it into 2 separate accounts one happens to be the Employees Super Account. The normal total wages paid is still a business tax expense for the Employer.
Abby very well paid people in the past used to be able to put a large amount of money into there Super and pay only 15% on it as tax, are you saying this has now been capped at $30,000 that they can claim the low tax of 15% on rather than unlimited numbers like maybe sums of e.g. $100, 000 in the past?
I can imagine the three word slogans from abbo already.