The federal government has taken a significant step to improve the equity and sustainability of the superannuation system, by increasing the earnings tax rate on large super balances. The October 13 announcement means the changes will bring in less revenue, but they will support low-income earners and protect against liquidity issues for some high-wealth individuals.
What are the changes?
Currently, earnings during the super accumulation phase are taxed at 15 per cent, regardless of the size of the super balance. While this system is simple to administer, it is out of step with the commonly accepted progressive tax and transfer system in Australia.
