Time to review your clients' super as taxes announced

by |

The coalition yesterday confirmed that they would re-impost a 15% tax on Australian workers earning less than $37,000, which includes 2.1 million women.

Tony Abbott confirmed during his appearance at the National Press Club that the Coalition would not be keeping the Low Income Superannuation Contribution (LISC). The purpose of the LISC is to effectively refund the tax paid by low income earners on their concessional superannuation contributions, including the superannuation guarantee, up to $500 per annum.

The LISC has been in place since 1 July 2012 at a cost of approximately $1bn per annum.

Treasury analysis says 3.6 million workers could see a tax increase of up to $500, which is three in every ten workers. This includes:

  • Around 1.1 million workers in NSW
  • Around 910,000 workers in Victoria
  • Around 800,000 workers in Queensland
  • Around 260,000 workers in South Australia
  • Around 360,000 workers in WA
  • Around 90,000 workers in Tasmania
  • Around 30,000 workers in the NT
  • Around 50,000 workers in the ACT

When asked about the change, Abbot said: “Well I said there’d be no unexpected detrimental changes and the change you allude to is one we’ve put on the record many months ago and yes, that stands.”

Australian Institute of Superannuation Trustees (AIST) CEO Fiona Reynolds said it was very disappointing that the Coalition was not supporting the measure, which was aimed squarely at boosting the retirement savings of those most in need.

“While the Coalition has been quick to criticise floated changes to super taxation concessions to very high income earners, they have no such concern for the lowest paid workers and their comfort in retirement," she said.

“We hope that the Coalition’s commitment to not making any negative changes to super includes
supporting the Future of Financial Advice Reforms, the productivity recommendations for default funds and maintaining the equal representative trustee system for not for profit funds as all these measures benefit working Australians.”

More stories:

Latest super tax cuts bad for planners?

Women the ‘super losers’

Planners’ expectations for 2013 revealed