A taxing wait for retirees
NORTHERN Rivers retirees can look forward to much higher retirement savings through a Federal Government overhaul of super-annuation.
Under the plan following the Henry Tax Review, super contributions paid by employers will increase from 9 per cent of an employee’s salary to 12pc in 2019.
Low-paid workers will also benefit from extra Government payments of up to $500 a year added to their super accounts, and workers aged between 70 and 74 will be eligible to have super contributions made on their behalf in 2012.
A new 40pc Resource Super Profits Tax plan was also announced to pay for a new infrastructure fund to be divvied up among the states.
Treasurer Wayne Swan released the eagerly anticipated changes yesterday.
Mr Swan said the changes would make the system fairer and simpler for families and businesses.
However, Ballina principal of WHK Accountants Don King yesterday rated the changes as a low five out of 10.
“It’s a work-in-progress, but the effect on the general taxpayer will take a long time to be felt,” he said.
The three main planks of the overhaul is a super tax on resources on miners’ profits, an increase in the superannuation guarantee, and a reduction in company tax.
While welcoming the ‘big picture’ changes, Mr King said he had expected more for individual taxpayers, including simplified income tax returns, and a reduction of tax on investment income.
He said the increase in superannuation was a good move, particularly for younger people, however he warned that it could pose a problem for small business.
“The superannuation guarantee was good but the problem for small businesses is whether it will be part of wage negotiations or one top of that,” he said.
Mr King also welcomed the immediate tax write-off for small businesses of items of less than $5000 as ‘helpful but not major’.
And while the 28pc company tax reduction will occur sooner for small businesses, which are major employers in the Northern Rivers, the Henry Review had suggested a cut of 25pc.