Future thinking should be shared. With that in mind our team publishes insights weekly to help keep you in the (k)now.


Hewison Private Wealth - Insights
Hewison Insights

Leave Super Alone

Glenn Fairbairn
Director/Private Client Adviser
9 Jan 2012

The ACTU this week called for the Government to reduce the tax concession on superannuation contributions for those earning over $180,000.

Under the current system, a flat tax of 15 per cent applies to concessional superannuation contributions. Individuals earning more than $180,000 per annum obtain a greater tax benefit from making additional pre-tax contributions to superannuation as they are paying the top marginal tax rate of 46.5%.

The ACTU said that while they support the proposed increase in the superannuation guarantee from 9% to 12% that it would be more equitable if the tax on super contributions was linked to the higher marginal personal income tax rate.

Whilst I can understand the ACTU’s intent, the Government has already introduced legislation to assist low income earners in building their superannuation balance.  The Government co-contribution and removal of tax on superannuation contribution for those earning under $37,000 are all policies designed to assist low income earners. In addition, a reduction in the concessional contribution cap from $100,000 to $25,000 over the past few years has minimised the tax saving for high income earners.

Introducing a higher tax for higher income earners would return us to the dark old days of the ‘superannuation contribution surcharge’. This system was an administrative nightmare for the ATO and added to the complexity of superannuation. Correct me if I am wrong but aren’t we trying to make superannuation simpler?

Superannuation was designed to “encourage” people to save for their own retirement and reduce the burden on social security. Thus far it has worked with Australians accumulating in excess of $1 Trillion in retirement savings. A removal of incentives or increase in complexity could result in individuals avoiding the system altogether which in the long term could be disastrous.

For the good of everyone can’t we just leave superannuation alone?

Hewison Private Wealth is a Melbourne based independent financial planning firm. Our financial advisers are highly qualified wealth managers and specialise in self managed super funds (SMSF), financial planning, retirement planning advice and investment portfolio management. If you would like to speak to a financial adviser on how you can secure your financial future please contact us 03 8548 4800, email info@hewison.com.au or visit www.hewison.com.auPlease note: The advice provided above is general information only and individuals should seek specialised advice from a qualified financial advisor. The views in this blog are those of the individual and may not represent the general opinion of the firm. Please contact Hewison Private Wealth for more information.