10 PER CENT RULE FOR CONCESSIONAL SUPER SHORT CHANGES WORKING AUSTRALIANS
The Institute of Public Accountants (IPA) is urging the Government to review the '10 per cent rule' which restricts a number of Australians from making personal concessional contributions into their superannuation.
Currently if a taxpayer earns more than 10 per cent of their total income from employment services they are unable to make personal concessional contributions to their superannuation from other sources of income.
"The 10 per cent rule is unnecessary and inequitable for a number of Australians. A taxpayer earning income from other sources who also works part-time to supplement their income is limited to the superannuation contributions made by their employer," said IPA chief executive officer, Andrew Conway.
"For example if a part-time worker is earning $15,000 but also earns income from other sources, the maximum concessional superannuation contribution will be $15,000 if he or she is able to salary sacrifice their entire employment income.
"The situation would be worse if the employer does not allow the employee to salary sacrifice in which case the super contributions will be limited to the compulsory SGC contribution of 9.25%.
"However a worker earning $25,000 from employment services could make $25,000 worth of concessional contributions into his or her superannuation fund.
"The 10 per cent rule only works to discriminate against the source of the contribution. We need to encourage Australians to prepare for their retirement and not deprive them of superannuation concessions.
"The IPA believes the source of the concessional contribution should not matter and this is one piece of legislation that should be repealed.
"Access to the concessional super caps should not discriminate based on individual circumstances," said Mr Conway