Unindexed super tax to hit half million Australian workers, Financial Service Council warns
Half a million Australians currently in the workforce would be impacted by the Government’s planned superannuation tax when they retire if the $3 million threshold is not indexed to inflation, according to a leading industry body.
The modelling by the Financial Services Council shows that the Labor proposal to hike the tax rate from 15 to 30 per cent on the earnings of those whose super balances are above $3m would hit more than 500,000 people, of whom 204,092 are currently under 30.
The Government has argued the legislation will make the tax system fairer and only would impact about 80,000 Australians, most of them above retirement age.
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By continuing you agree to our Terms and Privacy Policy.But opponents say the tax change will gradually capture a wider group of earners unless the threshold is indexed, and that it will disproportionately affect younger generations.
The new superannuation tax model is shaping up to be the first major policy battle of the new term, with the Coalition on Thursday confirming it would fight the proposal “every step of the way.”
The Greens, whose support Labor would need in the Senate, are open to a compromise that results in the threshold for the tax change lowered to $2m and indexed.
The modelling reveals the Greens’ position would trap more than 200,000 in the current workforce when they are ready to retire.
By contrast, the number of affected Australians would plummet to 64,365 if the $3m threshold was indexed to inflation.
Blake Briggs, the Council’s CEO, said while the superannuation industry recognised the need for a fair and fiscally sustainable system, Labor’s current approach risked undermining consumer confidence in the retirement system.
“The FSC is concerned that the absence of indexation is a deliberate and cynical design feature of the new tax, that targets younger Australians, in full knowledge that Australia’s deteriorating financial position means future governments will be too cash strapped to introduce indexation at a later stage,” he said.
The FSC chief urged Labor and the Greens to take a “more constructive and consultative approach” that would not unfairly target future generations.
