If the federal opposition's super tax policy were to be implemented, Australia’s lowest-paid workers would feel the effects more than the targeted “fat cats”, argues a Western Australia-based advice firm.
According to Securitor-aligned Empire Financial Group founder and managing director, Raymond Pecotic, if Labor were able to introduce its proposed taxes on superannuation they would “penalise” low-income earners.
“The federal opposition proposed changes to tax on super that were aimed at the fat cats,” Mr Pecotic said.
“But in reality, it is likely to ricochet and hit ordinary Australians who have worked hard, paid tax and rather than drawing generous income streams with their money, are utilising their funds for more modest purposes.
“Under the current system, there is no tax if [Australians] have withdrawn from their super after 60. [Labor’s] proposed new limit is set to be $75,000 per annum, after which point a tax of 15 per cent would be charged,” he said.
Mr Pecotic pointed out that many Australians withdraw their super as a lump sum so they can pay off their mortgage, but the introduction of this tax would affect their ability to do so.
“Say somebody retires with a $150,000 mortgage. Under the current system they could withdraw this amount tax free and have their house debt free,” he said.
“Under this proposed change, if the same amount was withdrawn (over the $75,000 limit), then we could assume this change would attract a tax of $11,250 at retirement.
“Quite a kick in the teeth for the battlers out there, and an obvious unintended side effect of this tax that is aimed not so squarely at the rich,” he said.
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