The Federal Government has released a discussion paper that argues for workers earning up to $37,000 to get a tax refund that will directly boost their superannuation savings.


The paper, released by Assistant Treasurer Minister for Financial Services and Superannuation Bill Shorten, calls for a number of superannuation reforms.


Currently, around 3.5 million Australians get no tax benefit from contributing to superannuation, due to the 15 percent superannuation contribution tax being at or below their income tax rate.

 

The Government intends to act on the recommendation of the Australia's Future Tax System (AFTS) Report which called for a more equitable distribution of  superannuation tax concessions.

 

From 1 July 2012, the Federal Government will aim to make the system fairer by ensuring no tax is paid on the 9 percent superannuation guarantee contributions for Australians earning up to $37,000 and that the money is instead directed into their superannuation.

 

An example of the way this policy will work is as follows: An employee who earns $36,000 salary as an assistant in nursing and has no other income. The employer makes a 9 per cent superannuation guarantee contribution of $3,240 into her superannuation fund. Currently, 15 percent of this contribution ($486) is deducted in contributions tax within the fund. Under this measure, the employee will receive to a government contribution of $486 paid to her superannuation fund for that year.

 

The consultation paper can be accessed here

 

Interested parties are invited to make written submissions on the consultation paper by 15 July 2011.