New details have emerged about the federal government’s plan to tax superannuation, with reports indicating only Australians earning more than $300,000 a year will be affected.
The reports also come as the government is attempting to smooth over the changes by saying any tinkering will not be designed to generate revenue, but instead to develop a system of sustainable savings capable of supporting people as they live for longer.
Superannuation Minister Bill Shorten is meeting with the superannuation sector and Treasury officials today for the first government superannuation roundtable of the year.
“The budget is not driving our superannuation reforms,” he is expected to say, according to The Courier Mail.
“The fact is Australians are living longer and they will need to have adequate savings to retire. That is what has been and will continue to guide us as we look to reform,” he will say.
A spokesperson for Shorten was contacted by SmartCompany this morning, but could not confirm whether Shorten would actually make those comments today.
Despite recent suggestions the current superannuation system is unsustainable, Association of Superannuation Funds of Australia chief executive Pauline Vamos told SmartCompany this belief is misguided.
“We are concerned a lot of the debate is misinformed. The wonderful thing about our system is it’s the community’s retirement system. Of course the community should be involved in the debate, but let’s get the facts first.
“Today the system is sustainable. It costs on average $300,000 per person. High income earners, they don’t have access to anything like that.”
The remarks come as The Australian Financial Review has reported any changes to superannuation are expected to be announced before the May 14 budget. It also claims any changes made will affect taxpayers earning more than $300,000 a year.
Tertiary Education Minister Craig Emerson has said the reforms will only affect the “fabulously wealthy”. Emerson spoke to ABC radio’s AM program yesterday and failed to clarify what defines “fabulously wealthy”, but said a debate is important.
“What I said in fact is that it is worthwhile having a debate about the fact that fabulously wealthy people are able to get an advantage of paying a 15% tax whereas everyday Australians on ordinary wages pay 30% or more.
In the last budget, an announcement was made to increase the tax rate for people earning above $300,000 from 15% to 30%.
The legislation for this change is due to be introduced in May and it is believed the May 14 budget this year could see a similar announcement for very high income earners to pay more tax on their super fund.
Vamos says the debate has turned “hysterical”.
“The system does need to be adjusted. It needs to be designed for people who live into their 90s, not their 70s,” she says.
The Institute of Public Accountants is calling for a demographic-centric approach to superannuation policy, saying people aged over 50 should be provided with increased concessional caps allowing for more adequate retirement preparations.
“Rather than a one-size-fits-all approach to policy, a more nuanced approach which takes demographic factors into consideration is required,” IPA chief executive Andrew Conway said in a statement.
“By designing a system that closely matches the level of taxpayer engagement at different age points we will help to establish a more optimal system.”