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More tax on super contributions to go towards LISTO: ASFA

Yasmine Raso12 August 2024
Leaking piggy bank

New research from the Association of Super Funds (ASFA) has informed recommendations made by the peak body to have a portion of the tax earned from certain superannuation contributions to boost the Low Income Superannuation Tax Offset (LISTO).

The research paper titled Achieving greater equity in superannuation said a combination of the Division 293 tax – which charges an additional 15 per cent on the concessional contributions made by individuals with income and superannuation contributions exceeding $250,000 a year – and the Division 296 tax currently before Parliament – which would levy an additional 15 per cent tax on the proportion of investment earnings related to an individual’s superannuation of over $3 million in value – would raise over $3.5 billion once effected.

ASFA said approximately $750 million of this should be used to boost the LISTO, raising the threshold to incorporate those earning up to $45,000 a year and increasing the maximum payment by $200 to $700.

This could allow a 35-year-old earning $44,000 to have their superannuation balance at retirement grow from $293,000 to $336,000.

“Division 296 and Division 293 aren’t just measures aimed removing tax concessions for those with high super balances – it’s an opportunity to make society fairer and provide low-income workers with a more dignified and secure retirement,” ASFA CEO, Mary Delahunty, said.

“This is about fairness – enhancing LISTO offers a powerful widespread impact for people’s retirement outcomes.”

Delahunty said the change would provide more financial security for an additional 1.2 million Australians, who are mostly women (60 per cent), young workers (55 per cent) or workers from a non-English speaking background. The research suggested that those working in typical blue collar, clerical and retail occupations would benefit, including 10 per cent of technicians and trade workers, 20 per cent of community and personal services workers, 15 per cent of clerical and administration workers, and 10 per cent of sales workers.

The research also revealed that 47 per cent of the total number of individuals with superannuation had a balance lower than $50,000  while 2.3 per cent had over $1 million, according to June 2022 data from the Australian Taxation Office (ATO).

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Callum
1 month ago

Great share Yasmine