ASFA said new research makes a case for the introduction of measures aimed at redistributing revenue generated through the government’s proposed changes to those with balances over $3 million and those earning more than $250,000 per year (Division 293) to support low-income earners by enhancing LISTO.
Mary Delahunty, ASFA CEO, said by increasing support for low-income earners and ensuring fair tax contributions from those with substantial superannuation balances, the government could “foster a more balanced and equitable retirement system”.
ASFA is calling for $750 million of the revenue expected to be generated from the proposed new tax be ring-fenced to increase the LISTO threshold for those earning $37,000 to those earning $45,000, alongside boosting the maximum payment from $500 to $700.
It claimed this change would benefit an additional 1.2 million Australians, a majority of whom are women and many of whom are young workers and workers from a non-English speaking background to significantly improve their financial security in retirement.
The research stated that in real terms, this could mean a 35-year-old earning $44,000 could see their superannuation balance at retirement increase from $293,000 to $336,000.
“Division 296 and Division 293 aren’t just measures aimed at removing tax concessions for those with high super balances – it’s an opportunity to make society fairer and provide low-income workers with a more dignified and secure retirement,” Delahunty said.
ASFA has called on Parliament to adopt these recommendations, which will ensure a fairer and more dignified retirement for over 1.2 million low-income workers.
“This is about fairness – enhancing LISTO offers a powerful widespread impact for people’s retirement outcomes.”
Fairness depends on your perspective. Many that will be caught up in this tax, if it sees the light of day, will be paying in excess of their current tax thresholds, and in some cases, well over 50% in any financial year, because of the taxing of unrealised capital gains (how can taxing unrealised gains be considered fair?).
And then in a year where there would have been a refund in any other income tax return, the funds will be with-held, possibly never to be returned. Fair?
The personal taxes of many of those that will be caught up in this tax proposal (affecting less than 0.5% of the population) already go towards paying almost 20% of tax revenue. Fair? No, its discrimination at its worst, where a minority of people are being punished for saving for their retirement years within superannuation.
Fortunately, many aspirational Australians understand this tax proposal as well. This Robin Hood mentality never ends well. There has got to be reward for effort and stealing peoples’ lifetime savings is not the answer.
There are already systems in place to protect those with reduced life-time savings. Its called a pension, paid already by those that this tax proposal will hit with a double whammy.
This is not a communist country. I fail to see how this will end well if it sees the light of day. You cannot steal peoples’ life-time savings and get away with it in a country like Australia….. Surely not?