The Gillard Government today introduced legislation which will allow older Australians to put more into their superannuation.
The legislation means that Australians aged 60 and over from 1 July, and those aged 50 and over from 1 July 2014, will be able to contribute up to $10,000 more to their super at the concessional tax rate.
The Tax and Superannuation Laws Amendment (Increased Concessional Contributions Cap and Other Measures) Bill 2013 provides the higher concessional superannuation contributions cap for older Australians announced on 5 April.
To help those nearing retirement to build the adequacy of their retirement savings the Government is introducing a $35,000 cap for older Australians.
"The Government believes that it is important to allow people who have not had the benefit of the Superannuation Guarantee for their whole working lives to have the ability to contribute more to their super as they near retirement," Minister Shorten said.
Accordingly, the Government has bought forward the start date for the new higher cap to 1 July 2013 for people aged 60 and over. Individuals aged 50 and over will be able to access the higher cap from 1 July 2014.
It is estimated that 171,000 people will benefit in 2013‑14 when the new higher cap is introduced for individuals aged 60 and over, and around 363,000 people will benefit in 2014-15 when eligibility is extended to individuals aged 50 and over.
This legislation will also amend the Low Income Superannuation Contribution (LISC) so that it operates effectively and as intended. The LISC effectively removes the tax paid on superannuation contributions by around 3.6 million low income earners, including 2.2 million women.
"While the Gillard Government wants to give working Australians, particularly low income earners, greater certainty on the adequacy of their retirement, Tony Abbott wants to cut to the bone."
"Tony Abbott has confirmed that he will scrap the payment we have introduced which will effectively increase the tax low income earners pay by up to $500 a year," Minister Shorten said.
These amendments will ensure that the Commissioner of Taxation can estimate eligibility for this payment where there is insufficient information to make the payment under the existing rules and that all concessional contributions are eligible for the payment.
This Bill will also make the super concessions fairer by effectively reducing the concession that very high income earners receive on their concessional contributions from 30 per cent to 15 per cent to align it more closely with the concession received by average income earners.
Around 1.2 per cent of people contributing to super in 2012‑13 will be affected by this change.
The Prime Minister, the Deputy Prime Minister and Treasurer, other senior ministers, the Opposition Leader and any other Federal politicians earning over $300,000 will have their tax concession reduced. This is regardless of whether they are in a defined benefit scheme or an accumulation scheme.