Labor expects to bank $32 billion over a decade by tightening controls on how much money can be contributed to superannuation and lifting taxes on high-income earners.
A million workers could be denied the opportunity to make additional contributions to their retirement savings or claim deductions for them under Labor’s super policy.
And workers on incomes of more than $200,000 will be required to pay additional tax on their super.
Labor is taking four key policy changes to the federal election.
They were announced three years ago but landed Labor Leader Bill Shorten in hot water this week after he appeared to forget about them.
The $32 billion revenue figure includes $13.7 billion announced by the Coalition in its 2016 budget, which capped tax-free super accounts at $1.6 million.
Labor says it will collect an additional $18.9 billion, with the bulk of the money – $12.3 billion – coming from two changes.
The first will deny catch-up concessional contributions to super. From July 1, 2018, workers with balances of less than $500,000 have been able to make contributions in excess of the annual cap of $25,000.
When the measure was introduced, the Coalition said it would help 230,000 Australians who take time out of work, whose income varies considerably from one year to the next, or who find their circumstances have changed to make catch-up contributions.
The second will be to deny deductibility of personal contributions to super. Also in the 2016 budget, the Coalition removed the so-called 10 per cent rule, which restricted deductions to the self-employed. Around 800,000 workers were expected to benefit from the change, although there are no official take-up figures.
Close 'loopholes' for rich
In essence, Labor believes its super policy will close "loopholes" for the rich.
"Each of these measures is more likely to be taken up by those on higher incomes who can afford to make additional superannuation contributions," its Making Superannuation Fairer fact sheet says.
"Meanwhile, the number of middle and low income earners who have the financial capacity to take advantage of these changes is limited."
If it wins on May 18, Labor will also lower the annual contribution cap for after-tax contributions from $100,000 to $75,000.
"By lowering the annual non-concessional contributions cap to $75,000 Labor will ensure the carry-forward allowance remains generous enough to accommodate the kind of one-off contributions middle- and low-income taxpayers make," the policy says.
"But we will also do a proper job of cutting back opportunities for higher income earners to gain tax concessions for large annual contributions."
A final proposal is to further limit concessions for high-income earners. So-called division 293 tax of 30 per cent will kick in at $200,000 rather than $250,000.
"This will mean that someone earning $200,000 gets the same super tax concession as someone earning $80,000 – but no more," the policy says. "Over 96 per cent of all Australian taxpayers will not be affected by this change to the ... threshold."
By Joanna Mather writes about superannuation from our Sydney newsroom. Connect with Joanna on Twitter. Email Joanna at email@example.com
17 April 2019