Mr Taxman
Change the way you feel about taxes.
Get informed and discover what the taxman doesn't want you to know.
Sharing it with Australia, Mr Taxman is a regular Woman’s Day columist and TV finance commentator
  • click to visit Mr Taxman on Twitter
  • click to visit Mr Taxman on FaceBook
  • rss

Increasing the superannuation guarantee to 12% won’t fix retirement savings: Grattan Institute

Feb 09, 2018

Lobby groups are continuing to call for the superannuation guarantee to be increased to 12% of a worker’s wages, but a new report from the Grattan Institute claims this won’t fix problems in Australia’s retirement savings system.

In a paper delivered to the Australian Gender Economics workshop today, Grattan Institute fellow Brendan Coates argues that making businesses pay their workers 12% in super guarantee won’t help with the gap between the retirement savings of men and women, because higher paid men will get the benefits.

Currently, employer super contributions for part-time and full-time workers will remain at 9.5% until June 30, 2021, but the levy is set to gradually increase to 12% by July 2025.

A variety of advocacy groups, including Women in Super and the Financial Services Council, have argued in pre-budget submissions for faster movement on a commitment to increase the mandatory contribution levels.

However, the Grattan Institute argues it would be better to change the way retirement savers get tax concessions within super. It argues that if the superannuation guarantee amount was lifted, employers would end up fulfilling this obligation but the increase would mean a hit to wages that workers take home each week.

“Increasing the super guarantee to 12 percent will hurt the living standards of low-income earners, the bulk of whom are women,” the Institute argues.

Some in the small business community have opposed increasing the guarantee to 12%, with Australian Small Business and Family Enterprise Ombudsman Kate Carnell telling SmartCompany last month that an increase would be a difficult cost for businesses to absorb.

“So it would actually create a new cost to business and that’s a real challenge,” she said.

Adrian Raftery, superannuation expert and professor in the department of accounting at Deakin Business School, says he doesn’t believe the federal government will move to change the rules on how much super businesses must pay workers.

“While I am incredibly supportive of further increases on this, I think it’s unlikely to happen,” he says.

Having made other significant changes to the superannuation system over the past three years, Raftery believes there isn’t much appetite for the government to change the game further in this year’s May budget.

However, he is critical of small businesses who say a change in the rules would hurt their business, saying “they should be able to absorb it”.

“Even if the change were to happen, it would only be an increase of 2.5% over five years. In that time businesses will have the opportunity to increase prices if they need to do this, as will their competitors,” he says.

No matter what the federal government does about the level of the superannuation guarantee, decision-makers in Canberra continue to have their sights on employers who are shirking their current super payment responsibilities.

In August 2017, the government outlined new powers for the Australian Taxation Office, including allowing it to seek court-ordered penalties for employers who fail to pay superannuation entitlements.

Meanwhile, the mid-year economic and fiscal outlook (MYEFO), released at the end of 2017, confirmed businesses of all sizes will have to use Single Touch Payroll technology to report payroll and super payments from July 2019.

Original article published here on SmartCompany 9 February 2018.

 

 

 

Comments

Post a New Comment

Media Availability

Are you interested in booking Mr Taxman for a speaking engagement or requesting his viewpoints for an article?

comments-rhsLatest Comments

  • "How i got my lost funds recovered in binary options through the help of Mr mason i have been in deep problem all this while almost lost all i have been investing from day one,i tried all i could to..."

    By: nicolas at Nov 14, 2019 2:39AM

    Post: Foreign currency trading

  • "Does my accountant have access to my registered relationship eg: will they know who I am in a relationship with and since when? Al"

    By: al at Oct 31, 2019 6:43AM

    Post: Marriage

  • "Hi, I am a doctor and I am contracted to work at Hospital "A". I however rotate every 10 weeks in different hospitals for my work (say Hospital "B" a few months ago). Am I able to claim car travel..."

    By: Sam at Oct 30, 2019 5:54AM

    Post: Claiming car expenses

  • "I’m looking to do my tax return myself online this year, have previously used a tax agent. I’ve never given my spouses details before when using an agent. I do not live permanently with him, nor do..."

    By: Hannah Snelling at Oct 30, 2019 4:09AM

    Post: Marriage

  • "Hi Mr Tax Man, This tax year I will be over the threshold and will receive a HELP bill to pay. Problem is I am moving to a low employment area for family reasons and It could be some time before I am..."

    By: will at Oct 06, 2019 11:44PM

    Post: Two important dates for those with HECS/HELP debts