A newly published reports says that Labor’s recently flagged super tax changes will mostly impact those over 60. The Association of Superannuation Funds of Australia (ASFA) report says older Australians will be most affected by new tax rates on super balances over $3 million.
Of those affected by the higher tax rate, 90 per cent will be aged over 60. In a media release accompanying the report, the AFSA said: “Introducing higher rates of taxation for balances over $3 million is projected to lead to a 9.5 per cent decrease in tax concessions in relation to investment earnings.
Those who will be affected are mostly aged 60 and over, with around two-thirds male. Around half are retired with those still in employment or business mostly involved in professional roles.”
The findings have been detailed in AFSA policy and research paper, ‘Equity and superannuation’, released last Thursday.
With respect to the Labor’s flagged tax increase, the report acknowledges a relatively low percentage of Australians will be affected. The majority of these could be classed as affluent, the report concludes.
Based on ATO data, in 2019-20 there were around 35,000 superannuation fund members with superannuation balances of over $3 million.
“[ATO] statistics indicate that around 65 per cent of those affected by the proposal are male. Those affected are relatively old, with around 50 per cent aged over 70 and around 90 per cent aged over 60.
“Those likely to be affected are relatively affluent on a number of measures. Around 25 per cent owned a rental property, around 25 per cent received dividends of over $40,000 a year and around 15 per cent had total income for tax purposes of over $500,000.”
Superannuation Guarantee for paid parental leave
In an accompanying statement, ASFA deputy CEO Glen McCrea also called for Superannuation Guarantee payments on paid parental leave.
“The upcoming Federal Budget provides an opportunity to further improve equity in Australia’s superannuation system,” he said.
“Introducing Superannuation Guarantee (SG) payments on paid parental leave and increasing the upper threshold for the Low Income Superannuation Tax Offset (LISTO) would substantially assist low to middle income earners, particularly women.”
The ASFA recommends the upper threshold for the Low Income Superannuation Tax Offset (LISTO) be increased to $45,000 a year. In addition, it recommends the maximum amount be $700 a year.
In championing such changes, the report highlights the relief superannuation provides to stresses on Australia’s aged pension system.
“Without super, there would be more than 500,000 extra individuals receiving the Age Pension,” the accompanying statement claims.
“Superannuation is substantially improving retirement incomes for nearly two million retired Australians by providing regular income streams. Around 600,000 households, nearly one million Australians, are mainly supported by superannuation in retirement.”
Mr McCrae says the Albanese Government will have the opportunity to strengthen the system further next month.
“The upcoming Federal Budget provides an opportunity to further improve equity in Australia’s superannuation system,” he said.
The full report is available through the ASFA’s Research and Papers page.
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