Super tax breaks policy

Font Size:

The Labor party is proposing a change to the contentious super tax breaks largely enjoyed by wealthier Australians. In a policy claimed to save $14 billion over 10 years, tax concessions on super would be reduced to a tax-free threshold on earnings of $75,000 in a single year. Above this amount, a 15 per cent tax rate would be applied.

In addition, the current high-income threshold of $300,000 would be reduced to $250,000 at which point a 30 per cent tax rate would apply to contributions to super, rather than the current 15 per cent. Mr Shorten claims that these measures are “all about putting fairness back into the system”.

Such measures are in line with the most favoured Budget 2015 policy change in the YourLifeChoices survey reported on Monday.

With the Liberal Party ruling out any changes to superannuation before the next election, the debate is hotting up.

Read more at SMH.com.au

What do you think? If you earn over $75,000 per annum in your super should you pay tax? If your income is $250,000 per annum, should your super contributions be taxed at a rate of 30 per cnet rather than the current 15 per cent?

Join YourLifeChoices today
and get this free eBook!

Join
By joining YourLifeChoices you consent that you have read and agree to our Terms & Conditions and Privacy Policy

Written by Kaye Fallick

167 Comments

Total Comments: 167
  1. 0
    0

    yes,yes,but lets wait and see what happens when and if they get the reins

    • 0
      0

      I predict with certainty based on Labor’s past policy: if Labor gets the reins again, every cent that is saved would go to funding the Centrelink costs of a recommenced influx of illegal, socially and financially dependant foreigners, same as the 52,000 that they rolled out the red carpet for before they were thrown out of government.

    • 0
      0

      Not Amused, a higher proportion of the money “saved” by this policy would go to the welfare bludgers that the Labour Party seems to openly encourage. This Robin Hood system of governing has to stop – people who work and work hard and save their money rather than wasting it should not be continually hit to pay for those who make no contribution to society at all. Stop hitting pensioners and retirees and address those who are bludging on the system.

    • 0
      0

      And what ‘welfare bludgers’ would these be? the unemployed, the sick, the injured, the old and inform?

      Get a life.

    • 0
      0

      https://sites.google.com/site/grappleruniversitypublications/home/department-of-irreverent-revolutionary-thought-dirt/welfare-social-security

      The principle of this discussion is that when a person or entity such as business etc gets some subsidies from government prior to pension/unemployment etc – they are already in receipt of Welfare In Advance. You subsidy on super is one such Welfare In Advance……

      Unemployment etc provide security in the event of lack of income and are thus Social Security – not Welfare. That word has become one of abuse and is incorrect in describing the social safety nets in place.

      When I was a child growing up ‘welfare’ was the boogiemen in the government who would take bad kids away…..

      Australia’s gone to the dogs in many ways….

    • 0
      0

      Seems rather odd for the self styled “party of ideas” to actually have an idea? Something’s not quite right.

    • 0
      0

      ROFL emoticon……. thanks Frank.

      Have to agree there….

    • 0
      0

      Not amused
      I see your dog whistle is in good working order.

    • 0
      0

      geomac, Not Amused is 100% correct on that! There is nothing surer. Bill Shorten has said as much.

  2. 0
    0

    Orwells “Animal Farm” in action.

  3. 0
    0

    Any decent accountant will be able to get around these new superannuation measures.

    If this idea does get the nod I hope it’s retrospective so that in three years time when I collect my super I won’t have to pay the exit tax of 15% . Not having to give the Government $112,500 in tax would be great!!!

    • 0
      0

      That’s why we need a proper review of the tax concessions available

    • 0
      0

      Exit tax of 15% not too sure what you mean here as the tax you pay is dependent upon your taxable income.

    • 0
      0

      Exit Tax? I think you must be stuck in pre 2006? You would enter pension phase and proceeds would be tax free. Even under this so called labor thought bubble your $750k would be free of tax.

    • 0
      0

      no exit tax as far as I know!

    • 0
      0

      Yes I have an exit tax. I’m in the old government Gold State System.
      In this system you pay no tax going in only get taxed when you draw on the superannuation. If I convert it to a pension with the government at the age of 60 I will pay 15.5% tax on the whole sum that I have in superannuation.

      I can also take a lump sum up to $185,000 but will pay 17.5% on that amount and put the rest into a pension scheme and pay 15.5% on the balance.

      I could also take the whole amount as a lump sum but would have to pay 32.5% tax when I receive it. That would obviously be crazy.

      I have been paying into this superannuation since I was a very young man knowing that in my retirement years I would be able live comfortably for long time. Forward thinking I like to call it.

    • 0
      0

      Good on you Paicey58. Sounds like you got a pretty good deal to me, especially if your contributions were pre tax. You showed a lot of sound judgement to persevere over the years. Many people don’t squirrel away a few dollars and I don’t know why?

    • 0
      0

      Thanks Frank.
      Yes they were pre tax dollars and like a lot of other people I raised a young family, bought a house, lost it all with a divorce after 18 years but carried on with the superannuation and now as retirement approaches rapidly I can see the hugh benefit of the superannuation I invested in all those years ago.

    • 0
      0

      Lucky you to be able to access that superannuation system, Paicey. Most of my generation had no access to superannuation, and many were forced into superannuation schemes that were poorly managed and their money was lost. I know of one ”government” scheme that took super contributions from workers and, unknown to them, used them to pay the employer’s workers compensation insurance premiums. After years of paying in, believing they were earning returns, workers found there was nothing in their funds. It’s not necessarily sound judgment that positioned workers to retire in comfort, but in some cases just good fortune. And while many of today’s full pensioners are directly responsible for their situation – having been careless or extravagant during their working life – and others are cheating the system, there are many who are where they are because of lack of opportunity, unfair dealing, badly run funds, etc.

      The Labor Party proposal is a good start to implementing greater fairness, but I fear it’s too little too late.

      Paicey, I don’t see why you should complain about an exit tax having enjoyed greater tax concessions than most on contributions and enjoyed membership in a scheme that obviously delivered reasonably well. Count your blessings.

    • 0
      0

      Paicey58, you also managed to raise a family AND bought a house?!!
      Lost it all and had to start again?!! That is a real success story. Thanks for sharing your story. I can only hope it inspires others to have a good old Aussie go!

      You know what Paicey58? your story raises a question in my mind.

      Yes…. how can we encourage others to have the courage and foresight to follow in your footsteps?
      I’ve heard people make excuses on here saying things like “super wasn’t around in my day” or “those who have a few dollars are cheating the system.”
      It is unfortunate that a forced savings scheme had to, not only be forced on those people, but also fully funded by their employer. Pareto was very intuitive and I’m sure it would come as no surprise for him to learn that 20% of retirees don’t need the pension.

  4. 0
    0

    We could save a damn sight more by putting all those public servants on a super scheme the same as the rest of us. Compared to the future unfunded liability for our bureaucrats pensions, any saving by attacking the self funded wealthy is peanuts.

    We will know Labor is serious about helping any but unionists when we see a reduction in the cost of the unionised bureaucracy. Of course we will be very busy ducking all those flying pigs by then. This is just another bit of social envy utilisation, to keep the low achievers voting Labor, who has a vested interest in keeping them where they are. I guess if they weren’t dumb enough to fall for it, they wouldn’t be low achievers.

    • 0
      0

      Your public servant super idea has merit since it includes politicians and their flunkeys.. all short termers and contracted, yet we pay them for life out of the public purse once they are gone. Nobody in the real world gets that and it is high time this was stopped and made the same as the real world. The purse is not unlimited.

    • 0
      0

      The changes made by Howard and Costello in 2004 did put Politicians into Accumulation schemes like the rest of us. Some of the long term politicians are still in the old Defined Benefit scheme, but as time goes by they will be fewer in number.

    • 0
      0

      Yes you are correct Frank. Shorten mentioned in his speech yesterday at the Press Club that some were on the old scheme but those who had entered politics later were on the new scheme and treated the same as public servants.

    • 0
      0

      Hasbeen you may not be aware that we have now have something called the “Future Fund” and the purpose of the Australian Government Future Fund is to fully fund the future superannuation payments of public servants, which currently come from the federal budget.

      “The Future Fund is a financial asset fund – consisting of cash and investments. Its purpose is to enhance the ability of the Australian Government to discharge unfunded superannuation liabilities expected after 2020, when an ageing population is likely to place significant pressures on Government’s finances.

      Withdrawals from the Future Fund to pay superannuation benefits may only occur once the balance of the Future Fund is greater than or equal to the Target Asset Level or from 1 July 2020, whichever is earlier. However, expenses associated with the investment and administration of the Future Fund may be drawn from the Future Fund throughout its existence.

      The Future Fund Act 2006 [External Site] established the Future Fund, the Future Fund Board of Guardians and the Future Fund Management Agency.”

  5. 0
    0

    My plan is simple – you can keep the current concessional rate up to a hoarding of what will return you on the market the equivalent of the pension. This is with the proviso that xx% of income is dedicated to super, since to do otherwise would allow people to never reach that position – i.e it is deemed that xx% is dedicated to your super and if you stuff around with it – your problem.

    After that your hoarding is viewed as savings, same as everyone else’s $10 a week in the bank for their kids – you pay full tax on it, and you pay tax on the income earned on it.

    Pretty simple.

    Add in that politician super funding goes on the open market under the same conditions. I’m sick of these people pulling $4-5k a week for spending money while still earning in the six and often seven figures elsewhere – something nobody else gets. Retrospective, of course.

    If you can earn, you get no super until pension age…. end of discussion. We’re not paying taxes to fund you with extra for life.

    • 0
      0

      If a person takes nothing form the government and pays their taxes then why is it a problem to you? I was taught by my parents that one should save a bit for a rainy day so if that’s hording then so be it.

    • 0
      0

      You mean you use no roads, transport, no defence, no law and order … no nothing that government provides? How is that taking nothing from government?

      Because it is a bought and paid for entitlement, same as pensions, unemployment benefits and so on are…

      Perhaps you have some unique system of storing c ash away that nobody else has…. without a single help or handout from government?

      Please explain…. you mean you just stashed it in the bank and saved like a fury? Must have been on a good wicket….

    • 0
      0

      Try looking at the issues I’ve listed – each of which draws a government subsidy in some way – super, negative gearing, tax concessions for businesses.. you name it – all these are government subsidies.

      How is that in any way different from receiving pension etc?

      It’s all out of the same purse…

    • 0
      0

      The man on the land doing it all off his own bat – with fuel subsidies, assistance with marketing, tax concessions etc…..

      EVERYBODY gets their cut out of the public purse in one way or another. the only questions are how much is right and how should it be balanced across society…

    • 0
      0

      Trebor.
      I know that it is impossible to explain things to the man who knows it all, however if you have been living in the country area for any length of time you will realise that “when the man on the land is making money, the whole area makes money.” Every time a farmer makes a dollar it is spread many times through the community. It may not be now true that Australia rides on the sheep’s back but farming puts a lot of money into our economy. Look at the millions exported annually. The biggest help the Government could give farmers would be to ban imports of items that can be produced locally. This would ensure the longevity of farmers and keep unwanted pests etc from our shores thus making us a very important country for exports.

    • 0
      0

      Thank you for your high praise, dougie – you side note on a side issue is noted…..

      I don’t ‘know’ everything… I just am able to think…… and add up… and see through politicians……

      BTW – I live in a country area….. a place cited as ‘in permanent recession’ by a local just today…..

    • 0
      0

      dougie, I think the best help this government can give is FTA’s and relationship building, introductions and breaking open new markets. When you have a really strong commercial relationship good things happen. For example, we will only get navels from California when our locals are out of season. So too will California get Australian oranges at the right time, if you know what I mean. You cannot protect us by closing our doors. We need to work with like minded countries.

    • 0
      0

      Frank,
      I agree but you must only work with countries that play fair both in their product cost – freshness and freedom from pests or disease. This does not always happen as you know. Often products are dumped on Australia at less than production costs or as we have seen recently without full testing and inspection. Home grown is best grown and should be freshest. Supermarkets should not be able to sell controlled atmosphere fruit and vegetables as fresh produce. It should be clearly labelled and this includes local grown and imports.

    • 0
      0

      Do grow up TREBOR. Not paying road tax on the fuel for farming machinery that does not use roads is not a subsidy, it is simple equity.

    • 0
      0

      Fertilizer subsidy ring a bell? Government assisted marketing organisations?

      Do grow up, Hasbeen. Your broad brush is very thin…. or perhaps you could explain to me how farmers do it all off their own bat with zero assistance in any way? Just forget the subsidies and so forth…..

    • 0
      0

      the taxes i paid when working went to pay for roads, health, infrastructure etc.

  6. 0
    0

    At last Bill Shorten has a policy, whether it is right or wrong or will ever be introduced if he wins government. Will Tanya Plibersek if she becomes leader of Labor carry forward the same policy, who knows. All I do recognise is that Labor are the spenders and the Coalition are the fixers of the Labor excessives.
    The move by the Health Minister to review certain tests and other matters within the health system is great as I believe there are too many mates referrals either for financial or friendship matters. There should be no tests not available for valid and real diagnosis. However in the last six months I have been referred from one cardiologist to another for a possible procedure which he said was “improbable that he would carry out the procedure.”Both of these cardiologists wanted to refer me to a sleep apnoea clinic just to see if I had sleep apnoea. When I refused I was treated as someone not wanting a cure.
    I was also referred for a bone density scan which I did not want but at my GPs advice I attended a small caravan type clinic for the 15 minute scan for no good advice to my doctor other than “Normal bone density for a person his age”. There were hundreds of these tests done in the couple of weeks that the testing was available and for what benefit. Good on you Minister.

  7. 0
    0

    Wow! ‘Baby boomers’ and biggots have really found a forum on LifeChoices – “influx of illegal, socally and financially dependant foreigners”???

    Thank goodness our offspring are running the world/country and have fortunately not listened to your biggotry. Time to get with it or, preferably, move on. This country has changed and no longer is a place where this biggotry is tolerated.

    • 0
      0

      Are you aware what is happening in South Africa? The land of bigotry. Whites maybe bigots but the same can be said of all colours and races.. Many Australians see this Country as a “Shangri La” and have no real concept or understanding of the real world.

    • 0
      0

      You have a lot to learn, waiting to retire at 70. Some of us have seen, first hand, the problems unwise immigration programs have caused. It’s not bigotry, but plain common sense to implement control measures to protect the lifestyle our forefathers fought to hand on to us, and to demand that immigrants respect our laws and values and contribute to growth rather than imposing a burden. We welcomed Italians and Greeks and Chinese and Lebanese and Indians, among others, and they have greatly enriched our society. But unfortunately, today, we are seeing an influx of immigrants who are unwilling to embrace our values and lifestyle and who want to bleed our tax system for benefits they have no right to. It’s not all. It’s probably not even most. It’s sad that some innocents will suffer for the wrongs of the guilty. But we have a major problem – evidenced in detected plans by terrorists and the rorting of child care benefits, to name just two instances that have been made very public. Other nations have far greater problems because they were less cautious in allowing immigrants in. Some foreign governments are now issuing public warnings based on their first hand experiences. ”Our offspring” may yet destroy everything my father and father-in-law fought to save with their arrogance and foolishness. Perhaps it’s time they stopped falsely accusing and started listening to wisdom.

  8. 0
    0

    a lot of these higher income savers are gifted most of their monies (NOBODY earns more than $2000 a week, the balance is a gift from employers) while people in the low paid jobs do not have the luxury of these excess funds. so the higher savings should be taxed at 30%
    jonghay

    • 0
      0

      Another jealous person who just wants to hack away at some one who has worked hard and achieved something in their lives. People who get big pay packets don’t work a 40 hour week so do they gift the extra hours to their employer ?

    • 0
      0

      You mean ceo’s and board members work more than forty hours a week per job? How do they manage five or six boards then and still get time for golf and traveling about? Bob Carr managed all right with his board jobs and his nice little super funder as our Secretary of State to add to his lovely state pension……didn’t affect his ‘productivity’ on a board for a second…..or his salary on it.

      You mean Joe Bloggs in the sewer digging business hasn’t worked hard?

      I think you’ve been listening to Joe Blowhard too long with his idiotic ‘lifters and leaners’…

    • 0
      0

      According to The Rule of Blowhard, a ‘lifter’ sits in an office for 25-30 hours a week pushing other people’s money around for huge personal profit and all perks and access to insider dealings, and a ‘leaner’ is one of the peasants out there leaning on a shovel and not actually contributing much to society, or someone thrown out of work or too old to work any more.

      If Joe’s ‘lifters’ do so much for society – how come all benefit accures to them only?

  9. 0
    0

    Again, like the Coalition, populist and poll driven. Just tinkering around the edges. Far too simplistic, still far too generous and obviously no courage. Note that the Opposition still haven’t agreed to pass that part of the 2014-2015 Budget that wants to remove the Senior’s SUPPLEMENT for Commonwealth Seniors Health Card Holders i.e. $894 per annum and $1,345 p.a. single/couple respectively, with incomes of $51,500K p.a. and $82,400K p.a.respectively. Needs a complete slash and burn overhaul, but, we’ll NEVER see it.

    • 0
      0

      Agreed grateful. These tinkerings around the edges are so blatantly political cowardice.

    • 0
      0

      Perhaps the reason the Senate hasn’t agreed to remove the Senior’s Supplement is that many who are just over the assets limit, receiving no pension, are actually worse off than pensioners when all the benefits are taken into account. I agree the Supplement needs to be reviewed, but we need a total review and overhaul of the system given the recent lowering of investment returns. Labor’s policy is a start – but too little, too late and unlikely to be implemented anyway. What disturbs me in Joe Hockey’s declaration that he won’t take action on unfair superannuation concessions. He is quick to want to slug battlers, but fairness is not a value he subscribes to, and common sense isn’t common among LNP politicians (or politicians generally, actually!)

  10. 0
    0

    please don’t suggest that $75,000 in Sydney is a ‘wealthier Australian’, and 10 years from now without adjustments and with someone like Shorten, or god forbid another Swan, $75,000 will be certainly NOT be wealthy.
    The whole point of Super is to be self reliant for if need be say 30 years.
    LEAVE SUPER ALONE

    • 0
      0

      The issue is – or should be – those excessive fat cats who are using super as a means of evading taxes both before and after… the imposition of the same burdens on those who are not in that category is cosmetic to make it palatable to the High End of town – those who least need it to be palatable. My system is better since it takes into account changes in income – i.e. allows indexing upwards.

    • 0
      0

      sorry – that indexing takes place during the life of the super account…. xx% of income is deemed to be super funding (waste it at your peril) – as income rises the % remains the same so there is no problem there. As for the limit before super saving is considered the same as ordinary savings – the point at which that saved amount will accrue the equivalent of pension -that will rise or fall due to market influences such as pension rate, interest rates etc.

      It’s really not that hard.

    • 0
      0

      I agree leave super alone. If people play by the rules they are not evading taxes so no crime is being committed.

    • 0
      0

      I think Super needs one change. The introduction of a Reasonable Benefit Limit. Say $1.5m or $2m which should be indexed to AWOTE. Then get a firm bipartisan agreement not to fiddle with it for 20 years. One of the main reasons our economy is stagnating is uncertainty. In my lifetime I have not seen so many changes to almost everything since 2007. The Howard years were the golden years.

    • 0
      0

      I’m afraid the issue is the hiding of income into super and having a tax concession both at the start and at the end – something that is obvious to everyone including this government. That is a tax minimisation strategy only available to the well-off, and therefore is not only patently unjust, but obviously an allowed strategy far out of line with the concept of providing for a decent retirement.

      The very people with no need for more in retirement are the one who benefit from this loophole.

      It is not I, dear Bonny, who am advocating chopping everyone. My offerings are more than reasonable to provide a reasonable pension sized income for all – only after that does anyone get taxed at ardinary rates on excess.

      My figures as posted show clearly that I do not look at the pension rate – but at the cut-off rate for pension as being a viable income from super – a very generaous position to adopt – it is ONLY those on excessive super who would pay their way.

      I really don’t see your problem here. You say you did it all yourself – meaning you got no concessional rate of tax on super etc (education?) – i.e. no Welfare In Advance – yet you defend super recipients at the top end as if your life depends on it and consider yourself more deserving than many who’ve done all the hard yards of life to end up with little or nothing.

      Deserving ain’t got nothing to do with it.

      Let me assure you – you are outside the scope of any discussion of mine.

    • 0
      0

      Trouble is TREBOR, “those excessive fat cats” you speak of could also be the very people who control the Senate.

    • 0
      0

      They probably are, Frank – in more ways than one….

      On the ‘excessive fat cats’ line – is a million a year paid out of super a reasonable amount for a pension? Case in court recently between the ATO and a super recipient copping a mill a year after tax concessions…

      THAT is one basis for the current review in Parliament….. I’m just offering suggestions that will safeguard the smaller fish and catch the big fish….

    • 0
      0

      Those who say ”leave super alone” are apparently happy to give billions of taxpayer dollars to the wealthy while cutting services to battlers. The system is unfair. It provides no incentive for the strugglers to save for retirement. In fact, it punishes them for doing so. Someone earning $180000 a year gets a tax of about 1/3rd of their earnings on investments in super. Someone on $19000 a year pays a 15c penalty for every dollar of earnings in super. Leave it alone, Sheriff of Nottingham? Those who say that are among the greedy elite, or just plain misinformed.
      We need a balance. We need to retain incentives to save and invest. We need to ensure those who are responsible and hardworking are fairly rewarded. But the current system is obscenely generous to the rich and cruelly oppressive on the poor. Labor’s proposal seems reasonable, provided the $75,000 cap is indexed appropriately. Someone earning nearly double the aged pension for couples shouldn’t object to paying a small tax on the earnings about that cap – and it really is only a small tax.
      We should also be re-examining the way asset and income tests work for the pension, though. It’s absurd to be paying pensions to people whose earnings are well above the majority wage, yet slugging people whose assets are not sufficient to generate an income higher than the pension. The entire system is flawed and needs a total overhaul.

    • 0
      0

      Fair thoughts, Rainey, and well put.

    • 0
      0

      I take exception to anyone saying how much a person should be able to” get by on in retirement.

      Many people want to do more than “get by” in retirement. They” want to travel etc; and enjoy their remaining years on this mortal coil and that is why many have scrimped and saved to ensure their retirement years are happy.

      Look at all the grey nomads for instance. They purchase a caravan etc and off they go enjoying themselves. Is it a case of the “green eyed” monster maybe!

      Yes, there are many who for one reason or another do not have the funds or health to do these things but do not try and pull down those who do.

      I dont have a caravan myself and no desire to do the grey nomad thing but I do not begrude anyone who is off enjoying the fruits of their labours. Good on them!

    • 0
      0

      Agreed, Radish. We see a lot of green-eyed monsters commenting here. The bottom line is that we have to have a welfare system that provides a decent standard of living for those who have no private means, but we should also recognize the right of those who have worked and saved to achieve their retirement goals to enjoy the fruits of their endeavours. What we should not do, however, is give obscenely generous concessions to the rich and privileged. And we certainly shouldn’t make it hard for battlers to save while over-indulging the wealthy. The Greens have actually come up with the most workable and fair proposal I’ve seen for reforming superannuation. Labor is at least showing some genuine intent, but they have missed the mark by a mile.

Load More Comments

FACEBOOK COMMENTS



SPONSORED LINKS

continue reading

Finance

Five smart moves for empty nesters

So, the kids have moved out, your home is finally yours again and you have ascended to the rank of...

Lifestyle

Why you turn down the radio when you're trying to park your car?

When you're looking for a destination, you might need to cut down the volume. Shutterstock Simon Lilburn, University of Melbourne...

Technology

Why we can expect smarter healthcare in 2021 and other tech trends

With last year dominated by the COVID-19 pandemic and much the same expected for 2021, it is unsurprising that healthcare...

Mental Health

Drug trial offers rare hope on Alzheimer's disease

There is finally a glimmer of hope in the fight against Alzheimer's, the most common form of dementia, which affects...

Pets

How the pandemic has turbocharged the pet care industry

Pet care is a big business, and the pandemic has made it bigger. An Animal Medicines Australia report says Australians...

Travel News

Australian government divided on lifting overseas travel ban

The federal government is divided about when international air travel will recommence for Australians, as consumers signal their intent to...

Food

Dietitian reveals the breakfast swaps worth making

If you're looking to live a healthier lifestyle, breakfast is a good place to start. It's the first meal of...

Finance News

COVID driving more older Australians into poverty

Many of us who endured lockdowns in Australia are familiar with the surge in energy bills at home. But for...

LOADING MORE ARTICLE...