There are indications the 2010 federal budget will contain changes to the superannuation tax regime to make the system more equitable for low-income earners, according to ING Australia head of technical services Graeme Colley.
“I might be wrong … but in a speech given by [Minster for Financial Services, Superannuation and Corporate Law] Chris Bowen at the end of last year to some of the large superannuation funds, concern was expressed about how lower-income earners who in effect had an average tax rate less than 15 per cent were contributing to superannuation money that was being taxed at 15 per cent in the fund,” Colley said.
The address was highlighting the fact that these individuals were not receiving any tax benefit from investing in super, Colley said.
Furthermore, these are the very people who should be receiving some sort of incentives to contribute more to their retirement savings, he said.
While believing the government will take action to try to rectify this situation, Colley is not certain about the form in which it will be handed down.
“I’ve had people suggest to me it might have similarities to the surcharge and so there might be some sort of rebate system brought in, but I couldn’t speculate on that,” he said.
“I think there will be something brought in and it will come in sooner rather than later. I think this year’s budget, being an election year budget for this government … they always bring in nice budgets prior to elections and that would be one very small tinkering with the system.”
“It would mean that lower-income earners would end up with larger superannuation savings,” Colley said.
