Treasurer rules out super tax cut

The Federal Treasurer, Peter Costello, has all but ruled out a cut to the 15 per cent superannuation contribution tax. Speaking at a business luncheon yesterday, Mr Costello said that the tax is a stalwart of the Government's Budget and taking it out would “open a fiscal hole”. He described the superannuation tax as “beneficial taxation regime”.

Mr Costello also rejected lifting the Superannuation Guarantee contribution above its present nine per cent, claiming that this would have ramifications for both employment and business profitability. For small companies in particular, he said, this is a pretty big cost and would affect employment levels. Mr Costello labelled the current SG level “feasible”.

The superannuation industry has called for the 15 per cent tax on contributions to be cut. Earlier this week, the Association of Superannuation Funds of Australia reiterated the call, arguing that the tax erodes the amount actually invested on behalf of workers. ASFA's CEO Philippa Smith claimed that of the nine per cent that contributed currently, only just over seven per cent is actually invested due to the tax.