The top 3 percent of workers could be in trouble this federal budget with persistent whispers in Canberra that the tax rate on super contributions could double for the people who earn more than $180,000 a year.
Obviously by introducing this measure the current limit would be reduced from $300,000 to $180,000 imposing a 30 percent tax rate on the super contributions of tax payers in this taxable income range. Everybody else pays 15 per cent tax. At the moment the higher tax kicks in when before tax income plus super contributions exceeds $300,000.
As far as numbers are concerned the 30% contributions tax effects about 1 per cent of employees, or 90,000 people, however introducing the $180,000 threshold would affect 3 percent of employees, an increase of 250,000. So in all about 340,000 people would pay 30 per cent tax rate on some of their super contributions. This would mean that an additional tax of $1.3 billion would be raised in the 2016/17 financial year by introducing this change.
With the 2016 budget being only 3 weeks away now, we just have to wait and see how much of this speculation indeed becomes a reality for the tax payers. The irony here is even though the government wants retirement to be self-funded in the future years, these type of measures are no doubt going to put off people from transferring additional money in super.
Note: Please seek professional advice from your accountant or financial planner prior to acting on the above
For more information about superannuation changes Industry super funds has an article here
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