Opinion
What about the 1.2 million Australians who receive no super tax breaks?
By Robbie Campo
If we want true tax reform we need to start with changes for the lowest balances, not the highest.
After the Albanese government’s landslide return to government all eyes have been on tax reform and in particular, a proposal to trim tax concessions for the 80,000 Australians with balances over $3 million.
Most of the 1.2 million Australians who miss out on tax concessions are women earning between $37,000 and $45,000.Credit: Karl Hilzinger
In the frenzied debate over the changes to tax concessions for this small group, commentators, news outlets and politicians continue to make noise over what is “fair”.
At the same time, we keep hearing calls for more ambitious tax reform policy that achieves two aims – to help the economy recover and, again, to strike a balance that’s fair.
So while everyone focuses on the super balances of 80,000 Australians with a handsome $3 million nest egg, what we should be asking is: what about the 1.2 million Australians who receive no super tax concessions whatsoever?
Is it fair that the majority of those 1.2 million Australians who miss out on tax concessions are women earning between $37,000 and $45,000? Including aged care workers, childcare workers, apprentices and women working part-time while caring for family.
Is it fair that this group pay more in tax on their super than their take-home pay?
Is it fair that we provide little to no tax concessions to those who typically have the lowest levels of retirement savings? And that the majority of tax concessions are skewed in favour of men despite the fact that many Australian women retire in abject poverty?
As tax brackets have changed, the LISTO (low income super tax offset) has not. That means that low-income earners are gradually moving to a scenario where they pay more tax on their superannuation than their income.
Review after review has recognised that superannuation tax concessions are poorly targeted.
Review after review has also shown that when we improve the economic fortunes of women and the lowest paid, that the whole economy benefits.
Reviews show that superannuation tax concessions are poorly targeted.Credit: Greg Newington
If we want to make reforms that genuinely improve the retirement savings of Australians and provide a boost to the economy, we need to reform the LISTO.
The LISTO was introduced as an attempt to address the kind of inequity mentioned above, but it has been frozen in time since 2016. It has never been indexed to reflect successive super guarantee or income tax changes.
Women in Super has always advocated that the LISTO should be adjusted annually to ensure the lowest paid, most of whom are women, are supported, not penalised when adding to their retirement savings.
If there is to be consideration of indexing anything in the current debate, indexing the LISTO should be top of the list.
The Albanese government has an opportunity to build on what has so far been a solid track record of tackling gender inequality and improving the lives of Australian women.
Reforming the LISTO would inject genuine fairness into our tax reform debate, it would lift up people who otherwise are at risk of poverty, and it would boost our economy.
Robbie Campo is the chair of Women in Super.
- Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.
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