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Industry praises low income tax relief
Changes to the superannuation tax regime for low-income earners have been warmly welcomed by industry bodies, which claim it will be a positive move to make the system more equitable.
Both the Industry Super Network (ISN) and the Association of Superannuation Funds of Australia (ASFA) have come out in support of the proposed measures, which will benefit 3.5 million low-income earners.
Under the proposed reforms, no tax will apply to superannuation guarantee contributions paid by Australian workers earning less than $37,000.
Rather, the Government will provide a superannuation payment of up to $500 annually for those eligible.
ISN chief economist Sacha Vidler said the change would remove a major disincentive for workers to make contributions towards their retirement.
ASFA chief executive Pauline Vamos said the plan would most benefit women in part-time and casual jobs, many of whom have relatively low superannuation savings.
Vamos said this would mean low-income earners would accrue more savings earlier, subject to compound interest.
“This is especially so for younger people and we know that the more money people have in super, the greater their level of engagement,” Vamos said.
The measure is set to be introduced by 1 July, 2012 with the first payment to be made in 2013-14 after individuals lodge their tax return for the preceding financial year.
ASFA stated it would make a submission to the Government in regard to the proposed mechanism for assessing and paying the rebate, but said there should be relatively few problems with the implementation.
AUTHOR
Ashleigh McIntyre
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