WHO’S HIT BY LABOR SUPER CHANGES
Plan to abolish concessional catch-up contributions
A mother takes four years’ leave without pay to raise her family and makes no super contributions during this time. Under the existing scheme she could contribute $30,000 to her super for each year she missed. Treasury estimates that would make her super balance at retirement age $311,000 higher. The government argues under Labor she would be $311,000 worse off.
Plan to reverse deductibility for personal super contributions
A 20-year-old starts a small business and separately works part-time in an accounting firm to pay himself a salary, with a combined annual income of $90,000. He contributes $15,000 to his super balance each year over 10 years and can claim a deduction on this, making the tax on his income $2925 lower each year over the decade. If he tipped that money into his super at retirement he would be about $105,000 better off. He would not qualify for the deduction under Labor’s proposal.
Plan to lower non-concessional contributions cap from $100,000 to $75,000
A woman sells the family home at age 45 and puts $300,000 — the maximum allowed under the existing scheme — into super. At retirement, her super balance would be about $641,000 higher. Under Labor’s policy she could contribute only $225,000 from the house sale, making her super balance $160,000 lower at retirement compared to the government’s policy.
Plan to reduce high-income super contribution threshold from $250,000 to $200,000
A man contributes $25,000 — the maximum amount of concessional contributions — to super each year. If his contributions are subject to the full amount of the higher-income super charge under Labor’s plan, which would set the threshold at $200,000 (down from $250,000), he will have about $121,000 less in his super balance after 20 years.