New analysis calls for major changes including restrictions on concessions as the country risks having ‘two classes of state-funded retirees’
Tax breaks for superannuation will cost the federal budget $52.5bn this financial year, almost as much as the aged pension, according to a new analysis.
The progressive thinktank is calling for major changes, ahead of a review of the purpose of superannuation that the assistant treasurer, Stephen Jones, has suggested could pave the way to capped balances or other restrictions on tax concessions.Australia’s generous super tax concessions are designed to encourage workers to save more for retirement and reduce reliance on the aged pension.
Investment earnings are not taxed on accounts with a balance of less than $1.7m. On accounts with a balance above $1.7m, investment earnings are taxed at just 15%, well below the top marginal tax rate of 45%. “Major changes are required, such as abolishing concessions for people whose existing superannuation balance makes them ineligible for the age pension,” it said.Richard Denniss, the executive director of the Australia Institute, said ATO data shows about 897 self-managed super funds are producing incomes of $1m or more.
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