Millions of workers earning up to $37,000 will get a tax refund that will directly boost their superannuation savings, under changes contained in a discussion paper released today by the Assistant Treasurer and Minister for Financial Services and Superannuation.
Currently, around 3.5 million Australians get no tax benefit from contributing to superannuation, due to the 15 percent superannuation contribution tax being at or below their income tax rate.
"The Gillard Labor Government firmly believes that Australian workers, whatever their income, deserve just rewards and financial security in retirement," Mr Shorten said.
The Government intends to act on the recommendation of the Australia's Future Tax System (AFTS) Report which said that superannuation tax concessions be distributed more equitably.
From 1 July 2012, the Gillard Government will make the system fairer by ensuring no tax is paid on the 9 percent superannuation guarantee contributions for Australians earning up to $37,000 and that the money is instead directed into their superannuation.
"The Gillard Government is committed to supporting low income Australians prepare for life after work now by building greater wealth and financial security through superannuation. We are particularly keen to see this tax refund implemented because it will significantly increase the superannuation savings for those working families and households across the country that most need some extra help with setting aside savings for their retirement," Mr Shorten said.
"We call on the Coalition to end their mindless opposition to this far-reaching policy that will build the wealth of 3.5 million low income Australians by $1.75 billion over the forward estimates."
"With no discernable economic heartbeat, the Federal Opposition simply have no retirement savings policy in the public domain and just don't want to talk about superannuation reform – whether it affects low income earners or anyone else," he said.
An example of the way this policy will work is as follows: Milena earns $36,000 salary as an assistant in nursing and has no other income. Milena's employer makes a 9 per cent superannuation guarantee contribution of $3,240 into her superannuation fund. Currently, 15 percent of this contribution ($486) is deducted in contributions tax within the fund. Under this measure, Milena will receive to a government contribution of $486 paid to her superannuation fund for that year.
The consultation paper can be accessed from www.treasury.gov.au.
Interested parties are invited to make written submissions on the consultation paper by 15 July 2011.
Submissions may be lodged electronically, by post or by facsimile to:
Contributions and Accumulation Unit
Personal and Retirement Income Division
PARKES ACT 2600
Facsimile: 02 6263 3044.
16 June 2011
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