Australia's super tax concessions will cost the government almost $60 billion in 2025-26, which is $9 billion more than expected. How can we afford it?
In Australia's superannuation system, over two-thirds of the tax breaks flow to the top 20 per cent of income earners.One of the biggest involved big upward revisions to the size of Australia's superannuation tax concessions .Gloomier economy to shape election), Treasury officials were forecasting that Australia's super tax concessions were going to cost the government $50.1 billion in forgone revenue in 2025-26.
Since super contributions and earnings are both taxed at a concessional rate , that means the "cost" to the government from its super tax concessions will be $18 billion more than expected over the next two years.How is super taxed? But under a model that taxed contributions and earnings, even with relatively low tax rates, Australia's government would collect revenue from an individual's super income throughout their entire working life.The PBO says there are benefits and costs to Australia's model.
The PBO says if Australia had an EET model, like other OECD countries, withdrawal taxes could be aligned with the personal income tax system to ensure consistency . For this person, Australia's TTE scheme is equivalent to an EET scheme with a 34 per cent tax on withdrawals . And thisThat's a simple comparison of two systems.
Chris Richardson OECD Superannuation Tax Concessions Treasury Parliamentary Budget Office
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