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Tuesday, 8 August 2006
Page: 134


Ms Hoare asked the former Minister for Revenue and Assistant Treasurer, in writing, on 29 November 2005:

(1)   Can he confirm that when a working Australian reaches the age of 70 years their employer is no longer permitted to make contributions to the worker’s superannuation.

(2)   Can he explain the rationale for the Government’s policy which prevents employees over the age of 70 years receiving employer contributions to their superannuation funds.

(3)   Can he confirm it is the Government’s intention to encourage Australians to work beyond the retirement age of 65 years.

(4)   Has the Government considered changing the legislation to ensure all Australian workers receive employer contributions to their superannuation regardless of their age; if not, why not.

(5)   Has the Government considered retrospective legislation so that Australians who have worked beyond the age of 70 years will be entitled to back payment of forgone superannuation contributions; if not, why not.


Mr Dutton (Minister for Revenue and Assistant Treasurer) —The answer to the honourable member’s question is as follows:

(1)   A maximum age limit of 70 currently applies to all employer contributions on behalf of a person (that is, employer contributions under the superannuation guarantee arrangements and other deductible employer superannuation contributions such as salary sacrifice contributions), with the exception of employer contributions which are required under an award or industrial agreement. In A Plan to Simplify and Streamline Superannuation released on 9 May 2006, the Government announced a proposal to allow employers to make contributions on behalf of their employees up to age 75. An employer will be able to claim a full deduction for such contributions.

(2)   Refer to the answer for question 1.

(3)   The Government is committed to providing enhanced opportunities and greater choice for mature age workers, recognising that their skills, experience and ongoing contribution to the labour force will play a vital part in securing Australia’s future economic strength. As part of this commitment, the Government has introduced a new Mature Age Worker Tax Offset for workers aged 55 and over. The offset provides a maximum annual tax rebate of $500 with effect from the 2004-05 income year. Eligibility for the offset is based solely on income from working, so that mature age Australians with income from working who also derive significant income from passive sources, such as superannuation and shares, can still benefit from the offset. To further encourage participation among mature aged workers, from 1 July 2005 individuals who have reached their superannuation preservation age and are still working can access their superannuation as a non-commutable income stream. This change recognises that older Australians may prefer to remain in the workforce but reduce their hours of work as they approach retirement. It allows people who wish to reduce their hours of work to supplement their employment income with income from superannuation. In A Plan to Simplify and Streamline Superannuation the Government has proposed that from 1 July 2007 superannuation benefits paid from a taxed fund for people aged 60 and over would be free of tax. This proposal would boost incentives to work. In addition, the Government has changed the superannuation contribution rules for persons aged 65 to 74. As a result, with effect from 1 July 2004, a person does not have to work every week to make contributions into an account with a superannuation provider. This change recognises that Australians aged 65 to 74, who wish to work, may prefer irregular part-time or short term contract work rather than working every week.

(4)   The Government increased the maximum employee age limit for employer contributions from age 65 to age 70 from 1 July 1997. In A Plan to Simplify and Streamline Superannuation released on 9 May 2006, the Government announced a proposal to allow employers to make contributions on behalf of their employees up to age 75. An employer will be able to claim a full deduction for such contributions.

(5)   It would be inappropriate to apply any increase in the maximum employee age limit retrospectively. All taxpayers require certainty in their application of the law, and retrospective application would reduce this certainty.