The Institute of Public Accountants (IPA) has urged the federal government to review the 10 per cent rule as it restricted a number of Australians from making personal concessional contributions into their super.
The recommendation was made as part of the institute’s pre-budget submission.
Currently, taxpayers who earn more than 10 per cent of their total income from employment services are unable to make personal concessional contributions to their super from other sources of income.
IPA chief Andrew Conway said the rule was unnecessary and inequitable for those Australians.
“A taxpayer earning income from other sources who also works part time to supplement their income is limited to the super contributions made by their employer,” Conway said.
“For example, if a part-time worker is earning $15,000, but also earns income from other sources, the maximum concessional super contribution will be $15,000 if he or she is able to salary sacrifice their entire employment income.
“The situation would be worse if the employer does not allow the employee to salary sacrifice, in which case the super contributions will be limited to the compulsory superannuation guarantee contribution of 9.25 per cent.”
In contrast, a worker who earned $25,000 from employment services could make $25,000 worth of concessional contributions into their super fund.
“The 10 per cent rule only works to discriminate against the source of the contribution,” Conway said.
“We need to encourage Australians to prepare for their retirement and not deprive them of super contributions.
“The IPA believes the source of the concessional contribution should not matter and this is one piece of legislation that should be repealed. Access to the concessional super caps should not discriminate based on individual circumstances.”
