Labor super reform package mistakes targeted policies for loopholes

Labor's super reform package proposal

Dana Fleming argues that Labor's super reform package mistakenly labels ‘catch up’ concessional contributions and deductibility of personal superannuation contributions as ‘tax loopholes’. 

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KPMG Australia

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Coins in jars

This week, Chris Bowen released Labor's new superannuation reform package. It's disappointing to see the stance Labor has taken in relation to the ability to make ‘catch up’ concessional contributions and the deductibility of personal superannuation contributions, labelling them 'tax loopholes'.

However, these are valid policy responses to address social issues such as:

  • broken patterns suffered by women while they are raising young families limiting the ability to make contributions in years they are not working and
  • the increasing trend of the combination of some part-time work with running a small business from home which can limit the ability of individuals to make contributions up to the new $25,000 cap.

Intuitively, while more men are taking on greater roles in raising families, implementation of these measures would seem most beneficial to women.

These policies improve flexibility in the system by responding to changing work patterns and importantly will allow growth in superannuation balances. Whilst the measures do have a cost to budget, in the longer term they should improve retirement outcomes for individuals and ultimately the Government by reducing pressure on the aged pension.

Both these policies still remain subject to the $25,000 concessional cap which is available to all Australians and it does seem unfair that due to a different work pattern an individual should be disadvantaged.

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