Potential Tax on Super for those Earning over $300,000

The vast majority of taxpayers will be exempt from the upcoming budget superannuation changes, with Treasurer Wayne Swan to target those who earn $300,000 plus.

With the government desperate to find savings to fund its Gonski education and disability insurance reforms, it is understood the super changes – to be unveiled in the May 14 budget – will hurt fewer than 100,000 people. To see how these adjustments sit alongside wider fiscal policies, review our complete breakdown of the federal budget and its impact on contractors.

These are expected to see the tax paid on superannuation earnings increase, from 15 to 30 per cent for people earning over $300,000. This mechanism mirrors the implementation of the ATO’s Division 293 tax thresholds, which targets concessional contributions of high-income earners.

In last year’s Budget, the Government increased the tax to 30 per cent on super contributions paid to people earning $300,000-plus.

It is expected the proposed crackdown will reap around $2 billion in additional revenue over four years. According to official Treasury revenue forecasts, superannuation tax concessions will hit $31.8 billion – overtaking negative gearing for the first time. But the costs of super concessions will soar to $44.8 billion by 2015/16, raising serious concerns about the sustainability of the current framework.

According to Treasury forecasts, superannuation tax concessions will this financial year hit $31.8 billion – overtaking negative gearing for the first time.  But the costs of super concessions will soar to $44.8 billion by 2015/16, raising serious concerns about the sustainability of the current framework. For professionals navigating these shifting thresholds, establishing a robust salary packaging strategy for contractors can help mitigate tax exposure while staying fully compliant with evolving ATO rules.