The government will do three main things - raise the compulsory employer superannuation contributions to 12% from 9% of salary over time, reduce the corporation tax from 30% to 28% over time, and introduce a 40% mining rent tax. For the latter state royalties already paid can be credited against the tax. The first of these moves was actually ruled out by the Henry Review. The second is more timid than the Henry Review (they proposed 25%) and the latter probably more aggressive. No bold tax reform is planned.
The first move will have no effect on Snork Maiden or me as our employers already contribute more than 12%. The second is rather marginal. The latter move could have negative effects on stock prices to the degree that a lower rate of resource tax was expected.
There are quite a few other provisions but I see them as being more minor. Superannuation taxes are unchanged as is the $A25k p.a. cap on concessional contributions for under 50s. Over 50s will be able to contribute up to $A50k p.a. if they have less than $A500k in super.
P.S.
"The Henry review recommended abolishing the tax on super contributions and halving the rate of tax on fund earnings to 7.5 per cent, neither of which was adopted by the government."
P.P.S.
It seems that they meant to abolish the super contributions tax and instead tax super contributions at normal rates. So yes that would be a move towards the Roth IRA model. The government just ignored this of course (like 136 other recommendations).
P.P.P.S.
The Review actually proposed a 20% "offset". This means that people on the 15% bracket would pay -5% on super contributions and people on 45% would pay 25% on super contributions. But, the full contribution would actually go into the fund. So this would have effectively increased the superannuation guarantee to 10.575% from 9%.
2 comments:
I love the politics in some of these changes. For example, the increased super contribution is apparently dependent on the resource tax getting passed... Even though the extra 3% SGL is going to be "phased in" over the next 9 years (with only 0.25% increases in 2012 and 2013). Given that the SGL increase will therefore be deducted by most employers from any wage rises being negotiated at the same time, the only real benefit to workers (and cost to government) is the reduced tax levied on SGL compared to PAYG income. ~15% of 0.25% = bugger all compared to the increase in the total amount of resource tax increment.
And the extra $500 government contribution for low-income workers is apparently just a rebate for super contribution tax paid -- so workers over the $37,000 limit won't get anything, but part-time and very low income workers also won't get the full $500 (as they don't pay $500 in super contribution tax anyhow).
Given this government's track record so far and I presume the need to put this through the Senate, who knows what will actually be implemented. I'm also sure they are holding back on some goodies that they will announce during the election campaign.
Post a Comment