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Saturday, June 25, 2022

Parliament takes another significant step towards scrapping of $450 super threshold

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Despite limited action on the acute aged care crisis, parliament has edged one step closer to ratifying small changes to treasury laws that could see massive, long-term impacts to the financial security of aged care workers and older Australians.

The second and third readings of the Treasury Laws Amendment (Enhancing Superannuation Outcomes For Australians and Helping Australian Businesses Invest) Bill 2021 saw a rare show of bipartisan support between Liberal and Labor members of the lower house, who unanimously backed the bill.

The removal of this threshold will improve equity in the superannuation system and increase the retirement savings of around 300,000 low-income workers employed in casual or part-time roles, around two-thirds of which are women.

Liberal member for Deakin, Michael Sukkar

The bill involved multiple reforms to treasury laws but, most relevant to aged care workers, the scrapping of the $450 earnings threshold for superannuation contributions, to be effective July 1, 2022, so long as the bill is passed through the Senate.

“The removal of this threshold will improve equity in the superannuation system and increase the retirement savings of around 300,000 low-income workers employed in casual or part-time roles, around two-thirds of which are women,” Michael Sukkar, the Liberal member for Deakin, said.

A Canstar analysis found that this could be the difference of up to $118,084 in a person’s super balance by age 67 which, for some, as Aged Care News investigated, can mean the difference between a secure retirement and homelessness.

Stephen Jones, the Labor member for Whitlam, called the amendment a “sensible move”.

“It’s an incredibly important issue, particularly for women and gig workers or workers who have multiple jobs, none of whom would earn, individually, $450 a month.”

Jones also acknowledged the rare moment of unity in a parliament that is more often than not strongly polarised.

It’s an incredibly important issue, particularly for women and gig workers or workers who have multiple jobs, none of whom would earn, individually, $450 a month.

Labor member for Whitlam, Stephen Jones

“I want to take the rare opportunity in a chamber which is usually full of rancour to congratulate the senator from Victoria, Senator Hume, who has personally worked hard to ensure that what was Labor Party policy is now Government policy and soon to be law in relation to the $450 threshold,” he said.

Though passed in the lower house, the bill will still need to progress through the senate.

Labor MP Tony Burke closed the second reading by imploring members of the Senate to read the bill as soon as possible.

“In commending the bill to the House, I would also urge the Government, as there are not many days left in the Senate, to please schedule this in Government business and get it through so the money starts getting into people’s superannuation accounts,” he said.

The bill also includes provisions to:

  • Increase the maximum amount of voluntary contributions that can be released under the First Home Super Saver Scheme from $30,000 to $50,000. Other policy settings, including the $15,000 annual limit on eligible contributions, will not be changed.
  • Reduce the age of eligibility to make downsizer contributions into superannuation from 65 to 60 years of age. This will allow more Australians nearing retirement to make a one-off post-tax contribution of up to $300,000 per person when they sell their family home.
  • Amendments to the Income Tax Assessment Act 1997 to preserve the work test for personal deductible contributions made by individuals aged between 67 and 75. It will allow retirees, who have not had the benefits of a mature super system throughout their working life, and may have accumulated savings outside of super, to get more out of the super system.
  • Reduction of red tape and costs for self-managed superannuation funds and small APRA regulated funds by providing trustees with greater choice in how they calculate exempt current pension income.
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