Sent: 22-12-2009 15:28:02
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Two Topics This Week
Two issues this week:
1. The Super Guarantee Minimum Income Threshold
When an employee earns more than $450 in any calendar month the employer has to contribute 9% of that income into a super fund. (If the employer doesn't make these contributions in the required time-frame then penalties will apply.)
This $450 amount has been around since the early 1990s and has never been indexed.
In August 2005 I argued in an ATC Digest article that between June 1991 and June 2004 average weekly wages had increased by over 69% and as a result back then the minimum SG income amount should have been $762.
More over I showed that the Melbourne Institute of Applied Economic and Social Research produces poverty line figures every quarter for a whole range of household situations. (Some argue that these numbers are grossly overstated, but that is another story.) In September 2004 the poverty line for a couple with two children, including housing costs, was an income of about $31,000 per annum.
Since the intervening period these numbers have no doubt increased by another 20% or so.
Recently some super industry associations have again argued that the SG income threshold should be reduced to zero. In other words all employees regardless of salary should be getting super. Others have argued that the super fund tax rates should be more in-line with a fund member's own tax rate (the argument here is that most lower income earners do not receive.
I am against reducing the SG minimum income amount. The current low rate regularly traps younger workers engaged in casual employment. This low income rate is one of the reasons we have so many small super fund accounts which everyone professes some concern over.
As for the different tax rates based on a member's own tax rate? This is fine as long as the policy objective is not a ruse to introduce another income redistribution policy. Our personal income tax rates are already highly progressive.
2. Looking for some time off over Christmas?
Well I suggest you might be disappointed. In the past month the Federal Treasury has released 13 different reviews, inquiries and consultations. Most of these require feedback sometime in January or February 2010. Depending on the natute of your business some of the reviews are quite important.
Finally please consider purchasing a copy of my book. You can look at the contents page at the following link: http://www.atcbiz.com.au/smsfbooktoc.pdf
Two options are available - once only subscription - $55 inc GST - or an annual subscription will gives you access to all the updates made throughout the year ($120 inc GST).
The book can be purchased at the following link: http://www.atcbiz.com.au/smsfstore.php
As is mentioned elsewhere this is our last issue for 2009.
We'll return on 19 January.
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