Institute of Public Accountants (IPA) chief executive Andrew Conway said the association sees no valid reason for the restriction on members making personal concessional contributions.
“This prohibition is inequitable for a number of Australians,” said Mr Conway.
“For example, a person who may have investments that provide passive income and also works part-time to supplement that passive income is limited to the superannuation contributions made by their employer.”
He also said small business owners who work part-time are not able to claim tax deductions for super contributions if their income as an employee exceeds 10 per cent of the contribution.
“The IPA believes the source of the concessional contribution should not matter, and this is one piece of legislation that should be repealed as soon as possible,” he said.
“Australians should be subject to a concessional contributions cap that does not discriminate against the source of the contributions.”
The SMSF Association (SMSFA) also supports this idea, arguing in its Budget submission that abolishing the 10 per cent rule for deductible personal superannuation contributions will ensure employees have an opportunity to ‘catch up’ on contributions.
In its submission, SMSFA said the alternative for employees earning 10 per cent or more of their adjusted income from employment is to use salary sacrifice arrangements with their employer to maximise their concessional contributions, but not all employees have access to this.
These employees are therefore disadvantaged, said SMSFA.
“The 10 per cent income test is a source of red-tape that could be easily removed from the superannuation system without affecting the integrity of the system,” said the submission.
“Removing the 10 per cent income test and allowing any superannuation fund member to make personal deductible contributions would reduce complexity for both superannuation fund members and employers.”
Totally Agree. No logical reason for this cap.
I agree with proposal. I have no idea why this rule even exists. It makes no sense at all.
Could not support this more, it has been a source of drama’s on occasion through the years. It was brought in under the “old” tax act when there was a difference between a 23F and a 23FB fund. That distinction no longer exists. We also now have much lower contribution caps so cost on Govt. revenue is relatively low. No reasons not to change.
totally agree, about time the Govt removed this, good to see the IPA taking this matter up. Why aren’t are CA and CPA joining this.