Call to tax retirees' super income

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A leading social services body is seeking a tax on retirees’ superannuation investment income to fund aged care.

In an 80-page submission in the lead-up to the May Federal Budget, the Australian Council of Social Services (ACOSS) also outlines proposals for a universal dental scheme, an increase in JobSeeker and the retention of JobKeeper for industries still heavily affected by the pandemic.

It also wants to see a fairer superannuation and tax system that eases the burden on low-income earners.

ACOSS says that in light of the Retirement Income Review, the government should focus on reducing the most severe poverty among older people – those renting privately and yet to qualify for the Age Pension.

ACOSS proposes a $370-a-fortnight increase in the base rate of JobSeeker to help protect those most vulnerable to severe poverty.

ACOSS chief executive Cassandra Goldie told The Age: “Currently, we have double the amount of people trying to get by on unemployment payments than we did before this crisis. They are looking to the Morrison government to ensure they can cover the basics.”

To pay for improved services, ACOSS is looking at retirees’ incomes.

Ms Goldie said most Australians were unaware that a superannuation fund’s investment income was not taxed once a fund member reached preservation age.

“Only 16 per cent of those over 64 are contributing through the income tax system,” she said. “Super [tax breaks] are for those with significant wealth … disproportionately benefiting those on high incomes.”

Current tax concessions cost the nation $42 billion a year, or almost the cost of the Age Pension, and ACOSS estimates that if retirees’ superannuation earnings were taxed at 15 per cent, it could deliver $2.5 billion to aged care services over 2022-2023.

With an ageing population and rising welfare costs, funding of health and aged care services will be under pressure. ACOSS says superannuation fund earnings post-retirement should be taxed at the same 15 per cent rate as in the accumulation phase.

The report also recommended a 15 per cent rebate, minus imputation credits, for retirees whose income is lower than the tax-free threshold.

“It’s a modest proposal … the support [for the tax] should come from the fact this is an important way to finance the aged care system,” Ms Goldie said.

ACOSS’ submission asks for a transition to a federally funded universal dental treatment scheme at a cost of $1.1 billion. “We should be alarmed by how rapidly people drew down on their often very modest super funds to cover these kinds of essential costs, which weren’t associated with the pandemic at all,” she said.

ACOSS wants the Superannuation Guarantee to be capped at 10 per cent – it is legislated to rise to 10 per cent in July and to 12 per cent by 2025 – to ease the burden on low-income earners over their working lives. Also, tax breaks for contributions should be reformed so they receive at least the same subsidy, per dollar contributed, as people on higher incomes. It said this could be achieved at no extra fiscal cost by replacing existing tax breaks for contributions with a uniform annual rebate.

Key points of the proposal to strengthen the public revenue base to meet current and future needs:

  • Do not proceed with $17 billion per annum in tax cuts for people with high incomes.
  • Extend the 15 per cent tax rate on super fund investment income to post retirement accounts to fund a guarantee of high-quality aged care services for all ($2500 million).
  • Reduce tax breaks for capital gains and remove the tax advantages of negative gearing strategies – this would also help prevent another surge in house prices ($2100 million in 2022-23).
  • Curb personal income tax avoidance through private trusts and companies ($2900 million in 2022-23).
  • Curb tax avoidance by multinational companies ($500 million in 2022-23).
  • Phase out diesel fuel subsidies for off-road use (except agriculture) and divert expenditure into climate change transition and resilience strengthening measures.

Do you think it’s fair to pay tax on retirees’ superannuation income earnings?

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Written by Rebecca Tolan

Rebecca has worked in journalism for 20 years, been a DIY-er for more, and is in the middle of her very own grand design. Retirement seems a long way off! In her spare time she rows surfboats, plays volleyball with her kids and dreams of future holidays.


Total Comments: 65
  1. 17

    This is woke socialism at its best and double taxation at its worst. You work all your life to save for your retirement with the promise whatever savings you paid tax on will not be taxed again.

    • 4

      Its so dodgy they’ll never work it out fairly and it is a vote loser massively. I’ve paid tax all my life and more taxes retiring as my wife has done as well, so I doubt this’ll happen.

    • 3

      Also I like a lot of others worked shift work, worked overtime and paid high tax rates and now they want to double tax us. Cut politicians 15% into their super to the same rates as everyone else with no pay rise for the reduction.

  2. 16

    I’m sorry – WTH – The Government encouraged us to work hard and save money to fund our retirement so we wouldn’t be a burden on the country. My husband worked 6 days a week for 15 years and when I went back to work and he dropped to 5 days. He is now 71 and STILL working. I am 63 and STILL working. We have paid our taxes – and still do – but once we decide to retire you want to keep taxing us. Bear in mind we won’t be receiving any benefits at all – not that we are rich in any way but just over the pension threshold. Why are we over the threshold??? We downsized our house, I am sure much to the Governments delight. So can someone please explain to me why we have worked so hard all of our lives to do WHAT????????

    • 16

      Fully agree , we have done everything the prior governments have requested to be self supporting (not a burden on the pension system), not rich , in retirement and now they want to change the rules again.
      We will end on the PENSION if they keep changing the rules (or worse in aged care)
      We have done our bit , find someone else to fix current government stuff ups

    • 3

      No one can explain, no politician will explain how any life long worker can ever be over the limit in gaging how much pension you have. It is a right not a priviledge, but you also should know that a massive amount of money was taken from the gigantic pension government fund to pay for certain things and both parties signed up to it.
      I think the newer parliament house in Canberra got built with some of that fund, I mean who the hell do these people think they are, that we put into government. Right now both parties are weak and confused and frightened to make decisions, or they promise all sorts of gobbledygook and can’t lay a price on it!
      That is a sad fact that minorities terrify our two major parties and they are runnung scared, I wish someone would say why minority groups scare our mainstream so badly. I am baffled.

    • 0

      It’s all very well to suggest taxing profits but as anyone who owns shares knows very well, shares periodically return losses. Does the plan have provisions for off-setting losses to be carried over into year? And by the by, in 1993 I paid more tax in that year than the value of my house! Now this government wants pensioners to feel guilty?

  3. 22

    Those who have worked & saved all their lives & put funds away for their retirement shouldn’t be taxed again, for the benefit of those who didn’t.

  4. 12

    Putting it politely – no friggin’ bloody way! God these suggestions/solutions they come up with absolutely appal me. I am so sick and tired of any government constantly changing the goal posts. I have less than $100k in my super – but always being a single, I worked bloody hard to try & have something there. I am happy with the way my super is going – the interest pays my annual rates, which are just on $3,000 for a paltry small 2BR house on small block.
    On one hand the government begs people to save for their retirement. On the other hand, they rub their hands with glee and see a pot of gold they want to try and get those dirty, grubby little hands on.
    Stop hitting on the hard workers – set your sites on those greedy big companies that pay less than 1% tax. Oh that’s right – that’s too hard. Much easier to hit those that don’t have much. God I’m beginning to hate getting old!

    • 8

      Your spot on sunnyOz….another easy target for the government,yet when it comes to taxing the greedy big companies it’s deafening silence.

    • 0

      sunnyOz, you worry too much. Nobody is concerned about your earnings from a $100K of super. If your income is taxed in the future then there will also be an offset that will more than compensate for the lost earnings. No doubt if your super balance had another zero or two then it would be a different matter. It’s about trying to achieve a fairer balance for the benefit of more rather than fewer.

    • 2

      This is not government policy but a proposal from ACOSS ( basically a mouthpiece for the ALP).
      It MAY become government policy if Albo and his cronies are given the keys to The Lodge.

  5. 2

    Should the government accept the ACOSS recommendations to tax retirees’ superannuation investment income, then I suggest we don’t donate to any of these ACOSS member organisations

  6. 10

    Tell them “They’re Dreaming”

  7. 8

    If you want to raise more money for more age care then start examining the tax rorts of big business, the super contribution scheme and how it favours high income earners, oversees banking facilities for corporate entities, politicians pension schemes, the list goes on and on.

  8. 6

    Add to that list the public services super contribution %’s higher than the private sector, , duplication of government services via state governments etc etc.

  9. 7

    If you want an early look at Labor’s policy when they get in government, read the above article put out but a socialist organisation, if you think it’s fair vote Labor, you will get your wish.

    • 5

      This is a submission put forward by the Australian Council of Social Services. I think you’ll find it’s made up of a variety of voting people. If you weren’t so biased you’d realise both parties are responsible for the unholy mess we are in. It’s a Liberalist attitude that thinks they can do anything they like and blame everyone else.
      I for one, am ashamed of how both parties think retirees savings and super are the ‘war chest’ for their failure to govern.

    • 7

      I agree. Typical leftist and greenie policy. Tax the hard working who have saved for retirement and with a plan to self support . This is the type of stupidity I would expect from these organisations. The result of this would be less retirees self funded and more on the pension. Then there ideas would fail. Thank god their mates didn’t win the last election and probably won’t win the next one with the leftie leader they have.

    • 9

      Exactly. Labor loves nothing more than hitting retirees who worked their butt off so they could have a decent retirement so government can subsidise those who couldn’t be bothered working or did nothing to save for their retirement and the current crop who think the same way.

  10. 6

    There are other revenue raising/ cost saving measures not canvassed by ACOSS – increase GST rate, audit aged care package expenditure to reduce waste and limit admin fees, stop welfare benefits being spent on illegal drugs by expanding cashless amounts, increase repayment rates for student loans, enforce transfer pricing on non resident service providers or introduce a minimum tax rate for them based in revenue not calculated taxable income, close offshore detention centres, to mention a few

    • 11

      Who is this Cassandra Goldie . Is she someone who actually contributes anything other than sitting on her backside getting paid by acoss while thinking up more ideas on how to extract more money from people who have worked hard and at the same time not getting funds from actually being productive. I haven’t heard of this organisation until now. Do they get their money for nothing to run it.

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