The government must review the '10 per cent rule’ that restricts a number of Australians from making personal concessional contributions into their superannuation, says the Institute of Public Accountants (IPA).
Super's 10 per cent rule 'inequitable': IPA
According to the IPA, as the law stands, a taxpayer who earns more than 10 per cent of their total income from employment services is unable to make personal concessional contributions to their superannuation from other sources of income.
Andrew Conway, IPA chief executive, described the 10 per cent rule as unnecessary and inequitable for a number of Australians.
“A taxpayer earning income from other sources who also works part time to supplement their income is limited to the superannuation contributions made by their employer," he said.
"The 10 per cent rule only works to discriminate against the source of the contribution. We need to encourage Australians to prepare for their retirement and not deprive them of superannuation concessions.”
Mr Conway said the IPA believes access to the concessional super caps should not discriminate based on individual circumstances.
"For example, if a part-time worker is earning $15,000 but also earns income from other sources, the maximum concessional superannuation contribution will be $15,000 if he or she is able to salary sacrifice their entire employment income.
"The situation would be worse if the employer does not allow the employee to salary sacrifice, in which case the super contributions will be limited to the compulsory SGC contribution of 9.25 per cent," said Mr Conway.
"However, a worker earning $25,000 from employment services could make $25,000 worth of concessional contributions into his or her superannuation fund," he added.