Federal Government changes to superannuation in response to the Henry Review will increase will harm small business says accounting firm BDO and COSBOA.
BDO Partner Paul Motta said the government was focusing on improving superannuation savings for low-income earners and the elderly, but had done little to make changes that would have significantly fuelled retirement savings.
“The 12 per cent compulsory contribution will have to be funded by employers, which substantially increased the cost of employing staff,” he said. “Though the change is gradual, it is not good news for employers, especially small business, for whom this is a large impost.”
He said the government was wrong to ignore the Henry Review recommendation that the tax on super fund earning be cut in half to 7.5 per cent.
“Halving the tax rate on earnings would go a long way towards fuelling savings without putting much of the burden on employers, particularly small business employers, who are the cornerstone of employment in this country,” Mr Motta said.
“Superannuation should not be about generating tax revenue, it is about saving for retirement and reducing the burden on social security in the years to come. This is particularly with the ageing of the population. It appears that generating revenue now seems to be a greater priority than fuelling retirement savings.”
Council of Small Business of Australia CEO Jaye Radisich said that there is little doubt that the increase in the Superannuation Guarantee of 3 percent will be passed on to consumers given that it represents a direct cost for business.
“However, the seven year phase in period for the SG changes will make it easier for businesses to adjust to the increase, and will enable small businesses to plan and budget for the increased costs, and to factor these in to future wage negotiations.”
“The Council is disappointed that the Government has not sought compulsory superannuation contributions from employees.”