An article on the website ato.gov.au talks about the Division 293 Tax Legislation. This is the one that proposes lesser super tax concessions for very high income earners (as subjective as the term remains). The 2012 Federal Budget took it upon itself to create a fair playing ground for high earners and average earners.
Lesser ‘concessional’ benefits for high-income earners
In attempting so, it has cut down the tax benefits that the really high income earners have been receiving on concessional contributions to their Super Fund so far. To put things in perspective, an average earner pays 30% income tax whereas he needs to fork out 15% on concessional contributions. This can be termed as a 15% rebate.
From 30% to 15%
High earners, on the other hand, are liable to pay an income tax of 45% and still they are at par with average earners when it comes to concessional contributions- 15% in their case too.
Division 293 Tax Legislation
This is exactly what Division 293 tax legislation aims to set right, argues the article on the Australian Taxation Office’s website. It intends to reduce the gap of 30% to 15% in case of high-earners.
Upper ceiling of $300,000
For the financial year 2012-2013, ATO will start handing over their assessments in January 2014. Tax liabilities will be determined by looking at a person’s income for surcharge purposes (remember Medicare Levy where high-income earners are taxed 1% to 1.5% beyond their tax threshold) and low-tax contributions. In the event of this cumulative figure crossing $300,000, the individual will have to abide by the directive of ‘293’.
You can read the original article here.
In my opinion, the move is just as welcome as the Low Income Super Contribution (LISC) move which aims to aid low income-earners (the eligible ones) in saving enough for their retirement. I am sure you know I am talking about government’s super payment of 15% on concessional contributions for those with adjusted taxable income of less than $37,000 per annum.
I have also been an admirer of Super Co-contribution programmes aiding low and middle bracket earners. The idea, as I can hopefully assess, is to bring down the gap between the different hierarchies of earners. Kudos! The government will however have to be cautious about how objectively it implements the plan and with what success.