Revenue generated by the proposed $3 million superannuation tax should be “ring-fenced” to increase the Low-Income Superannuation Tax Offset, according to the Association of Superannuation Funds Australia (ASFA).
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 (Division 296) 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 generated 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 claims this change would benefit an additional 1.2 million Australians, the 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 said 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,” said Delahunty.
ASFA is calling on the 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,” said Delahunty.
