Advanced Search

Share Coverage



Category: Government and Politics / Federal Government / Superannuation

Abbott government considered $5.5b crackdown on super tax breaks

Monday, 8 Aug 2016 10:04:04 | Greg Jennett

Documents reveal Joe Hockey and Tony Abbott considered $5.5 billion in savings. (AAP: Paul Miller)

The former coalition government, under Tony Abbott and Joe Hockey, secretly examined an overhaul of superannuation taxes up to five times larger than those adopted by the Turnbull–Morrison team.

Heavily censored Treasury documents marked "Protected" and released under Freedom of Information laws reveal a set of eight options were considered in October 2014 to produce budget savings ranging from a hefty $5.5 billion in its first year (2017–18) down to $1.25 billion.

The $5.5-billion savings option was to replace the current 15 per cent flat tax on superannuation contributions with a new system that would tax contributions at "marginal rates minus a 20 per cent non-refundable rebate".

By comparison, the Turnbull–Morrison superannuation tax changes announced in the 2016 budget would produce only $1.5 billion in savings in the 2017–18 year.

The Abbott–Hockey government did not adopt any of the Treasury options, perhaps because of the then prime minister's over-arching first-term promise that "there will be no unexpected adverse changes to superannuation under a Coalition government".

But Treasury in late 2014 had made the case for a shake-up to superannuation taxes, arguing "there would be substantial equity gains by taxing superannuation contributions at marginal tax rates minus a flat rebate".

By switching to a flat tax rate in both the "accumulation and drawdown phases", Treasury also suggested "there would be substantial simplicity gains".

In response to the question "what problem(s) do these options address?", Treasury noted that tax breaks on contributions are "generally perceived to be inequitable, because the flat 15 per cent tax rate provides a much greater concession to high-income earners than low-income earners".

It went on to set out eight options to remove the flat 15 per cent contributions tax on super and replace it with tax at marginal rates, reduced by a "refundable rebate" of varying amounts.

If the tax overhaul had been adopted, Treasury's design would have offered more generous rebate incentives to younger workers.

Under one option, those aged under 35 years old would get a rebate of 25 per cent, those aged 35–50 would get a 20 per cent rebate, while savers aged over 50 would get a 15 per cent rebate.

The current Treasurer, Scott Morrison, settled on more modest limits to superannuation tax concessions, placing a $1.6-million cap on the amount people can transfer into tax-free retirement phase super accounts and restricting after-tax contributions into super at $500,000 over a lifetime.

Legislating the super changes is among the Treasurer's top priorities when the 45th Parliament sits.

Reflecting on the tax breaks brought in by the Howard–Costello government, Mr Morrison told the ABC "the tax arrangements for superannuation have been extremely generous."

"They were made extremely generous at a time when there was $20 billion of surplus in the budget and $40 billion in the bank," he said.

"Those sorts of concessions can no longer be afforded."

AustraliaPlus


 

Copyright © 1999- Shanghai Daily. All rights reserved.Preferably viewed with Internet Explorer 8 or newer browsers.

沪公网安备 31010602000204号

Email this to your friend