* Superannuation is deferred wages/salary.
* Compulsory superannuation: Employers must pay an amount equal to 9.5% of each employee's wage/salary into a complying super fund.
* Compulsory superannuation started in 1992 at 3%, and is now 9.5% (some groups want this raised to 15%).
* Every increase adds costs to businesses, which increase prices.
* Federal MPs and Commonwealth public servants currently receive 15.4% superannuation.
We will lower MP (and public servant) superannuation from 15.4% down to 9.5%.
We will replace the 15% flat-rate tax on super contributions, with the employee's marginal tax rate.
* Voluntary superannuation (contributions phase tax concession):
An employee can salary sacrifice (instruct employer to pay an extra portion of salary into his/her superannuation account instead of receiving that money as salary).
This additional superannuation contribution money is currently taxed at a flat rate of 15% into the fund (or 30% for the portion over $300k salary).
High income taxpayers (45% marginal tax rate) are currently only taxed at a low 15% (or 30%) tax rate on these amounts, so they can reduce their tax liability by diverting salary into super.
A fairer system would have all contributions phase amounts (compulsory and additional) taxed by the employer at the employee’s marginal tax rate (0%, 19%, 32.5%, 37%, 45%).
The estimated tax leakage from the present 15% flat tax arrangement is estimated to be greater than $16b/year.
* Superannuation (accumulation phase) tax concession: The current rate of tax on superannuation fund earnings is currently 15%.
* Superannuation (retirement phase) income is currently taxed at 0%.
We will make the superannuation system fairer.