Superannuation tax slug for 200,000 to boost federal Budget savings

HIGHER-income earners would pay more tax on their retirement savings under planned superannuation reforms.

Australian Prime Minister Malcolm Turnbull is surrounded by year 5 students from Malvern Primary in Melbourne after speaking to members of the Australian Publc Service during an Institute of Public Administration Australia event at Parliament House in Canberra, Wednesday, April 20, 2016. (AAP Image/Lukas Coch) NO ARCHIVING

HIGHER-income earners would pay more tax on their retirement savings under planned superannuation reforms.

In next month’s federal Budget, the government is expected to reduce the income threshold for super contributions taxed at 30 per cent from $300,000 to $180,000, slugging more than 200,000 workers who now pay super tax of just 15 per cent.

The tightening of concessions could save $2 billion a year, four times more than under Labor’s plan to reduce the threshold to $250,000.

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But the move would also be a major reversal: Treasurer Scott Morrison last year ­attacked Labor over its proposed crackdown on high-­income super tax concessions.

Last May, Mr Morrison said: “Superannuation is there for people who have been saving over their lifetime to provide for their retirement. We don’t think that people who have done that should be punished with higher taxes.”

Mr Morrison refused to comment on Budget speculation yesterday, saying simply: “The Budget in on May 3.”

In 2012-13, Australians poured around $115 billion into super; 70 per cent of contributions were made at the ­discounted pre-tax rate, which is normally 15 per cent — a rate often less than the earner’s marginal income tax rate.

Under the current system, wealthier Australians who pay 45 per cent tax on every dollar they earn above $180,000 can therefore save 30c of tax for each dollar they contribute to super.

Treasurer Scott Morrison. Picture Kym Smith

But the majority of taxpayers — earning less than $80,000 a year — can save only 17.5c in the dollar.

Next month’s Budget is also expected to reduce the maximum amount per year that workers can contribute to super accounts at the discount rate from $30,000 to $20,000.

Opposition Leader Bill Shorten said yesterday Labor had led the economic debate for the past year.

“We’ve said all along there are unsustainable tax concessions at the top ends of superannuation,” Mr Shorten said.

“We think it is the right way to go to close down some of the unsustainable tax concessions.

“But I find the government’s last-minute conversion to this a trifle interesting ... now they realise that Labor was right,” he said.

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Originally published as Superannuation tax slug for 200,000 to boost federal Budget savings