* multinational tax avoidance
* tobacco tax hike
* increase the 37% tax bracket
* extra 1.2bn for schools, 2.9bn for health
* superannuation changes (tax rate, contributions caps, transition to retirement, LISC scheme scrapped)
* company tax cuts
MAY 3, 2016 12:00AM
Australians will face stricter controls on the cash they put into their retirement nest eggs, in a major budget saving that threatens to trigger a backlash from voters preparing to leave the workforce.
In a severe tightening of the rules, the cap on contributions will be slashed from $180,000 to as low as $50,000 for those who make the lump sum payments from their after-tax income.
The government will also clamp down on “transition to retirement” rules that have been labelled a rort for allowing older workers to avoid tax by paying their salary into their super funds and then drawing on tax-free distributions from the same fund to pay their everyday expenses.
In the biggest single saving, the government will double the tax on super contributions for workers earning more than $250,000 a year, bringing Coalition policy into line with Labor’s and neutralising a potential election issue.
The final budget package has been scaled back in response to a determined lobbying effort by Coalition MPs who fear they will lose votes as a result of the hit to workers who are trying to build up retirement savings. The pressure from MPs has helped to head off bigger changes to the super tax breaks, such as a higher contributions tax for workers earning $180,000 — a reform that had been considered as recently as one month ago.
The government is determined to avoid any retrospective change to super, which means there will be no tax increase on earnings from existing funds and a grandfathering of the changes to the “transition to retirement” regime. This will limit the impact on those who currently use the scheme.
Those on the full Age Pension will be largely unscathed from the changes, which will be billed as a more sustainable “retirement income system” that will encourage fund managers to create more annuities and private pensions.
Scott Morrison has warned against loopholes in the super system that undermine the integrity of the rules, arguing that the aim of the system should be to ease pressure on the Age Pension and encourage workers to save for their future.
Winners from the Treasurer’s reform package will include workers on lower incomes and women who leave the workforce to raise children.
Labor has attacked the government over several years for repealing a top-up for low-income super balances that costs the budget about $1bn a year. The government dismantled the Low Income Super Contribution on the grounds it was funded by a mining tax that never generated the revenue first assumed.
Tonight’s budget will outline the Coalition’s answer to that Labor attack by offering more help to those on low incomes, who have little incentive to contribute to super because the 15 per cent tax on their super contributions is higher than the average tax rate on their income.
The help for women will take two forms: a government payment of a regular super contribution during paid parental leave, and more scope for women who return to the workforce to make higher contributions.
The caps on annual contributions are some of the most sensitive settings in the system because they limit the ability of workers, especially those approaching retirement, to build up their savings.
The concessional cap is currently $30,000 for most workers, allowing them to salary-sacrifice that amount so that the sum is transferred without them paying their marginal tax rate on the amount.
While The Australian was told yesterday that this would be reduced to $20,000, other sources would not confirm the change and said Coalition MPs had been trying to head off the reduction.
The non-concessional cap is currently $180,000, which means workers could put this much into their super fund from their after-tax income.
The Australian was told this would fall to about $50,000 — a big cut that would restrict the ability of wealthier workers to build up big super funds. Mr Morrison said in October that he wanted to close “loopholes” that represented a threat to the integrity of the superannuation system.
SSecret Squirrel (03-05-2016)
And while I know teachers do a lot of work during the holidays they are not working 8 to 4 on those days.
I hate school holidays because of the juggle. The teachers I know do still do lots of planning and paper work but they can juggle it much more easily during the holidays.
My eyes are rolling over the 12% tax excise every year for 10 on cigarettes. This was actually a Labor policy, it was crap then and crap now. All it's doing it taking advantage of addicts. Put a fraction of that back into completely free quit smoking aids for rich and poor. Otherwise it's pretty transparent that they are cashing in on addicted people.
On the other hand, I look at people like my MIL who never wanted to quit and cost the public health system god knows how much over the years with her smoking related issues. So I kind of see where the tax on cigarettes is useful and not necessarily cashing in on addicts if that makes sense?
the education one is hard.
While I am one of the few who actually like NAPLAN (being able to have an idea of where my child sits in terms of the rest of the country is good) ... testing for 5 year olds is just horrifying - and results based pay or incentives is even worse.
The SES formula is a good method for allocating funding. Based on needs, based on the disadvantage that the children are facing ... those are sound areas to base funding around.
Requiring specific results from students is most definitely not.
Principals and school boards are the ones who should be monitoring teacher performance. It isnt something that can be measured with statistics, exams and student performance.
As for testing 5 year olds - they cant really be serious? WTF for?
Some are never going to give up. But if we make the aids completely free then there is tangible savings right now for them. Addiction is a powerful thing and telling a pack a day smoker that in 2 months they'll save X amount often isn't enough to make an impact. Telling them *today* you can save X amount may.
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