Calls to boost contribution caps to $60k
One lobby group has proposed the government change the current 15 per cent tax concession on contributions to a 15 per cent rebate, or double the contributions cap to $60,000 as an alternative.
In its Pre-Budget submission, the SMSF Owners’ Alliance (SMSFOA) said “dropping the taxes on superannuation earnings introduced by Labor in the 80s would, together with ‘progressive’ taxation of contributions, increase government tax revenue from superannuation".
The submission continued: “Our proposal involves taxing the individual rather than the super fund for contributions with a rebate and so, with the removal of earnings taxation, the operation of super funds is substantially simplified."
SMSFOA executive director Duncan Fairweather said that if these measures are implemented by the government, then the current contribution caps will be sufficient for most Australians to retire on self-funded pensions equal of their pre-retirement after-tax income.
“However, if the government does not reform the structure of superannuation along the lines we propose, then the contributions cap will need to be doubled to $60,000,” said SMSFOA.
A ‘replacement rate’ of 60-70 per cent of pre-retirement after tax-income, SMSFOA said, is an “internationally accepted benchmark” of what an individual should be able to retire on.
“However, reports of Treasury modelling of super pensions equal to 70 per cent of median income suggests that they may be pushing to reduce contribution caps, so less concessionally taxed money flows into super,” said Mr Fairweather.
SMSFOA argued this was the “wrong approach” as a “fair system should have caps high enough to allow most Australians to retire on self-funded pensions equal to 60-70 per cent of their pre-retirement income, not limited to be a low common denominator.