AUSTRALIA - The government has taken on board the Business Regulatory Taskforce's call for simplification of superannuation tax rules but refused to raise the super guarantee exemption threshold by more than 100% to A$800 a month.
In the report, Rethinking Regulation, the taskforce claimed the increase, from $450 per month to $800, would represent approximate indexation to average weekly ordinary time earnings since 1992. It was aware the recommendation, if taken on board, would reduce superannuation guarantee coverage and may have disadvantaged casual and part time workers.
In its response to the report, the government agreed, in full or in part, to 158 of the 178 recommendations made.
This decision was lauded by the Association of Superannuation Funds of Australia (AFSA). Although the ASFA would like to have seen the SG threshold removed completely, retaining it at $450 per month is a good result said Philippa Smith, CEO, ASFA.
Many people make a living from cobbling together two or more casual or part-time jobs. If the threshold were raised it would have robbed them of more of their workplace super, she added.
One of the suggestions the government will take on board is comprehensive simplification of superannuation tax rules.
The government said it had, a comprehensive plan to simplify and streamline the tax rules for superannuation including greater flexibility in how superannuation savings can be drawn down in retirement. This will drastically reduce complexity of tax arrangements that currently apply to Australians’ superannuation benefits.
In addition, the 2006-2007 budget also contained measures that will contribute to reducing the complexity within the superannuation tax regime.
These included: allowing the self-employed to claim a full deduction for superannuation contributions and being eligible for the government co-contribution for their personal post-tax contributions, abolishing reasonable benefit limits, replacing age-based restrictions limiting tax deductible superannuation contributions with a streamlined set of rules and allowing deductible superannuation contributions to be made to age 75.
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