In its submission to the government’s tax discussion paper, PwC stated that in order for Australians to save a level of funds “over and above” the superannuation guarantee amount, there should be tax incentives in place to encourage voluntary savings.
PwC believes the current concessional contributions caps per year of $30,000 for those under age 50 and $35,000 for those aged 50 and over are too restrictive.
The big four firm has encouraged the government to consider a lifetime concessional contribution cap rather than a yearly cap.
PwC also said the quantum of the lifetime concessional contribution cap should be based on the level of savings required to provide the average person a comfortable living standard in retirement.
In addition, PwC has called for the removal of the 10 per cent rule for personal deductible contributions to increase accessibility to the concessional cap.
Finally, the firm has recommended the government consider increasing the age at which a person can access the “bring forward” non-concessional contributions cap to age 70 to recognise that people are staying in the workforce longer.
“This would create a fairer system as it will allow part-time workers and people with periods of leave from the workforce the same ability to access the tax incentives to encourage savings in superannuation, as someone who is working full time throughout their working life,” PwC stated.
“It also reflects, that for many people, the ability to fully utilise the concessional contribution caps will occur in different periods of their working life.”
PwC also argued that while the concessional contributions tax of 15 per cent should remain, in the interests of “fairness and equity” in the level of net tax concessions for contributions across all earning capacities, the current additional tax imposed on taxable contributions should be levied at a lower threshold than the current level of $300,000.
“The appropriate level that this should apply would need to be considered with regard to the personal individual marginal tax rates, so that the level of tax concession is similar for all income earners,” PwC stated.