Currently, if a taxpayer earns more than 10 per cent of their total income from employment services, they are unable to make personal concessional contributions to their superannuation from other sources of income, the IPA stated.
IPA chief executive Andrew Conway said the 10 per cent rule is “unnecessary and inequitable” for a number of Australians.
“A taxpayer earning income from other sources who also works part-time to supplement their income is limited to the superannuation contributions made by their employer,” he said.
“For example, if a part-time worker is earning $15,000 but also earns income from other sources, the maximum concessional superannuation contribution will be $15,000 if he or she is able to salary sacrifice their entire employment income,” he added.
Mr Conway believes the 10 per cent rule only works to “discriminate” against the source of the contribution.
“We need to encourage Australians to prepare for their retirement and not deprive them of superannuation concessions,” he said.
“The IPA believes the source of the concessional contribution should not matter and this is one piece of legislation that should be repealed,” he added.
“Access to the concessional super caps should not discriminate based on individual circumstances.”
I agree that this needs to be changed so that everyone can access their concessional cap to its limit. At present employees are largely unable to use income other than salary sacrificed income to make contributions, wheres as self employed or those earning investment income can use all their income to make concessional contributions.
A good example is when an employed person sells an investment, makes a capital gain and wants to make concessional contributions in the year of the gain. They cannot do this effectively in the same financial year as the gain unless they are able to change their salary sacrifice agreement.
I agree with this. Why should it matter where the contribution comes from?