Wealthy Australians will have generous superannuation tax concessions cut in the 2016 budget, Treasurer Scott Morrison has confirmed.
The cuts were expected to be announced in Tuesday evening’s budget, Mr Morrison’s first as Treasurer. They were part of a push to deal with the integrity of the tax system.
“We’ll be ensuring that we better target the concessions that are there in superannuation, we’ve said that for some time,” Mr Morrison said.
“I don’t think there’s any great secret about that, the details of those things we’ll deal with on Tuesday night.
“But it’s important that we get these incentives right because superannuation is so important for Australians and for their future and we need to make sure that those concessions are well targeted.”
The federal government has hinted at changes to after-tax super contributions, lowering the income threshold for a 30 per cent tax rate from $300,000 to $180,000.
Superannuation was one of the final avenues open to the government to raise revenue, after changes to negative gearing, the capital gains tax discount and increasing the GST were ruled out.
‘High-income earners can take care of themselves’
Superannuation groups have supported the prospective reforms.
Industry Super Australia chief economist Stephen Anthony told The New Daily any cuts to tax concessions should be redirected into the industry and not overall savings.
“Quite frankly, [high-income earners] can take care of themselves, they don’t need the government to support them,” he said.
“Provided most of that saving is reinvested back into the superannuation system and handed to low wealth individuals … then it is an admirable thing.
“But if they are cutting back tax concessions for high wealth individuals and just using it as a saving or to use in other places, it depends on what they are doing, but that is just robbing Peter to pay Paul.”
Australians put $22 billion of after-tax contributions into superannuation in the 2014-15 financial year – equivalent to one-fifth of total contributions – Australian Prudential Regulation Authority (APRA) found, Fairfax Media reported.
If there were cuts to concessions for the wealthy, the savings should be directed to low- and middle-income earners, Australian Institute of Superannuation Trustees CEO Tom Garcia said.
“Compared to other OECD countries, our spending on the retirement income system is low and projected to remain low,” Mr Garcia told The New Daily.
“If there in an increase in super taxes for high-income earners the savings should be redirected to improve super outcomes for low-income earners, part-time workers and women.
“A budget that fails to address the need to improve retirement outcomes for low-income earners will be unfair and short-sighted.”
The federal budget will be handed down on Tuesday at 7.30pm (AEST).