TheInstitute of Chartered Accountants(ICAA) andCPA Australia(CPAA) have urged the Federal Government to bring the superannuation treatment of self-employed people in line with that of employees calling the difference a form of discrimination.
The two accounting bodies suggest the different tax status given to contributions by the self-employed compared with employees discourages further saving for retirement.
The CPAA and the ICAA state the self-employed can claim 100 per cent of contributions up to $5,000 but only 75 per cent above $5,000 subject to age-based limits.
On the other hand employee contributions, including salary sacrificed amounts, receive a full tax deduction up to the age-based limits.
CPAA superannuation policy adviser Michael Davison says an equal system will provide a simpler and more uniform tax system on super with ICAA superannuation policy adviser Susan Orchard stating it would shift the dependence many self-employed people have in their businesses to provide retirement savings.
“Not all businesses and self-employed people succeed. Recent survey by the Productivity Commission found that only 50 percent of small businesses continued to exist after 10 years.
“Many self-employed have their savings in one basket which increases their risk. It is imperative that we encourage them to save for their retirement via superannuation,” Orchard says.
The moves by the two accounting bodies follows on from the carve out from FSR they received on self-managed superannuation funds and further approaches to politicians seeking further exemptions on other superannuation vehicles.
