I told you that a new acronym was upon us!
June-17-2011Hello fellow super enthusiasts!
You may recall an earlier blog entry in which I was banging on about a new acronym….what do you mean I am always banging on about acronym?! I have hardly ever mentioned SEA, ASP, APRA, ATO, SG and of course I rarely say TFN!
Ok, enough of the silly stuff, I am in fact talking about the Low Income Earners Government Contribution (LIEGC). Currently, about 3.5 million Aussies get no tax benefit from contributing to super, due to the 15% contributions tax equalling or exceeding their marginal tax rate. The LIEGC provides these members with a superannuation payment of up to $500 per annum to remove the disincentive of contributions tax.
It’s a cracking idea and will go a long way in helping increase the super balances of those earning under $37,000 per annum. Anyway, the discussion paper was released for consultation yesterday and it details how the measure will actually work, be administered, the eligibility criteria etc.
Once you’ve had a read of it, let me know how you think this measure should work and I’ll have a word to my friends in Canberra.
For example, if we imagine this being in place within the Stronger Super regime, how should the LIEGC interact with MySuper products? For example, should a MySuper product take precedence over other products when it comes to the LIEGC being credited?
I don’t have the answers….that’s why I’m asking you!
Yours in Super,
Hans
An excellent measure – and long overdue – which will benefit the millions of people who do not currently get a tax benefit from super. This will include a large proportion of women who work part time and earn under the threshold, and are most in need of a boost to their super due to broken working patterns and lower average incomes.
It looks like it will operate much in the same way as the Govt co-contribution. I do wonder though how they’ll go about recovering over-payments if a member’s assessable income changes and takes them over the threshold?
Sadly, there’s still no measure to address the $450 threshold which disproportionately disadvantages women who work multiple part time jobs and never exceed the threshold. If the govt are serious about boosting the super of lower income workers they need to abolish the threshold.