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Shorten to blame for 78 per cent super tax

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Media Release Senator Mathias Cormann Shadow Assistant Treasurer Shadow Minister for Superannuation

22/0113/MC 22 January 2013

Shorten to blame for 78 per cent super tax

The reason a director of Dymocks was hit with a 78 per cent tax on inadvertent excess super contributions is because Bill Shorten has been asleep at the wheel on this issue for the past two and a half years instead of acting on Coalition calls to fix it.

Ms Ann Verschuer is sadly not Robinson Crusoe.

More than 65,000 Australians were hit with excess contributions taxes in 2010/11 and the number has been growing in recent years.

Depending on individual circumstances the federal government's tax take can be as high as 93 per cent. This is completely unacceptable and should long have been fixed.

Instead, Labor collected more than $108 million in excessive additional taxes from people making additional voluntary savings to help them achieve a self-funded retirement, but where somebody along the way made an inadvertent mistake.*

Often the mistake is made by an employer or a superfund, or it is just the result of administrative delays in processing certain payments - that is it happens outside the direct control of the individual super saver.

To hit people with a 93 per cent tax in those circumstances is tantamount to government theft, targeting people working hard to achieve a self-funded retirement.

These are people who are fundamentally trying to do the right thing by looking after their own retirement needs so as not to be a burden on the public purse.

Where inadvertent mistakes are made, often outside the direct control of the individual contributor, people should be able to regularise their affairs without being hit by such a disproportionate tax penalty.

All Australians who have breached their contribution caps through inadvertent mistakes should be given the opportunity to correct their mistakes without incurring heavy penalties, just like they can in other parts of the tax system.

Bill Shorten clearly doesn't care. If he did he would have long sorted this out.

He will not because this is a Labor government desperately short of cash and unable to balance the books.

If the Coalition wins the next election, we will properly address this issue of excess contributions to make sure that Australians are not unfairly penalised for genuine unintended errors when making superannuation contributions.

MEDIA CONTACT: Senator Cormann 0411 874 546

*Answer to Question on Notice 1549, $108 million in 2010-11 financial year on contributions made 2009-10, most recent data available.