Australia’s highest earners receiving millions through poorly targeted super tax breaks
The very top income earners in Australia are receiving a greater amount of government support through superannuation tax breaks than people on medium to low incomes, according to the latest tax modelling by actuaries Rice Warner and Industry Super Australia.
Under existing policies, the top 1% of high income couples retiring in 2055 will receive more than $5 million in government assistance, on average, over their lifetime through poorly targeted superannuation tax breaks.
Current super tax breaks also favour men, who receive the lion’s share of support. The top 1% of Australia’s highest earning males will receive $2.9 million each over their lifetime.
For the top 1% of earners, super tax breaks more than double their retirement income. Uplifted by government support, high earning couples will enjoy more than $600,000 a year in retirement income – nearly 10 times the retirement income of the lowest 10%.
“Super tax breaks for top earners are outstripping assistance to middle and low income Australians, especially women, even when the age pension is included. This is at odds with the core objective of the retirement system,” said David Whiteley, CEO of Industry Super Australia.
“Disturbingly, the lowest earning 10% of couples will pay extra tax of about $75,000 on their super over their lifetime. Instead of a tax break, it’s a tax charge on the people who most need help.
“This tax alone is the equivalent of at least 3 years’ extra work for a low income earner.”
The ISA-Rice Warner modelling estimates that the tax on super paid by 65 low income couples (receiving no tax break) effectively funds the tax breaks enjoyed by one high income couple in the top 1%.
“Tax concessions should benefit those who need the assistance. The current superannuation tax breaks, perversely and unsustainably, do the opposite,” said Mr Whiteley.
For further information, please contact Phil Davey 0414 867 188