Wealthier individuals in Australia may have to pay higher taxes on their superannuation in the near future, with the government hinting that superannuation tax concessions will be reorganised to target those who are most at risk of relying on the age pension in retirement.
Industry groups are expected to be advised of the proposed changes this coming week.
Some industry observers believe that the government will tax super contributions at people’s marginal rates minus a discount to ensure everyone receives the same tax benefit on super contributions, regardless of their level of income.
At present, super contributions are taxed at 15 per cent. The presumed discount approach would reduce benefits for the country’s highest-income earners and provide larger tax breaks for low-income workers.
While setting the discount at 15 per cent would save the Australian government $5.8 billion a year, 9.5 million Australians would have to pay more in contributions tax than they do presently.
One alternative to the suspected tax changes would be to reduce the amount of money and individual can save in super. This practice would immediately decrease costs and lower the cost of tax breaks over earnings in the future because the amount of money covered when people retire would be lower.
Under current superannuation rules, people under the age of 50 can contribute up to $30,000 a year into their super accounts.