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Carbon tax to impact low-income earners' super
The Government’s carbon pricing proposal and the subsequent increase in the tax-free threshold may have unintended consequences for low-income earners wanting to access a superannuation contribution rebate.
In submissions to Treasury, both the Association of Superannuation Funds of Australia (ASFA) and the Australian Institute of Superannuation Trustees (AIST) expressed concerns that while a higher tax-free threshold will alleviate the need for low-income earners to file a tax return, they will still be required to do so for the purpose of accessing the proposed rebate.
The submissions stated that the issue would need to be considered as part of the implementation of the Government’s carbon price announcement.
ASFA suggested a way around the problem might be for the Australian Taxation Office to use information from payment summaries issued by employers to establish eligibility for the rebate along with the use of tax return information.
AIST added that the attractiveness of superannuation as a concessional tax environment would be reduced under the tripling of the income tax threshold, as more Australians will have a marginal rate of tax of less than the present 15 per cent.
AIST also suggested the Government’s plan not to index the contribution would mean the payment may be de-coupled from future changes in either the lowest marginal tax rate or the superannuation guarantee, which would result in pockets of taxation inequity.
Despite these issues, both associations said they strongly supported the measure as an excellent step towards increasing the retirement benefit for low-income earners and reinforcing to the community that superannuation is a tax-effective form of savings.
AUTHOR
Ashleigh McIntyre
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