The Australian Government's May 2008 Budget contained changes to the way superannuation is being taxed. Under the new rules, contributions made under salary-sacrificing arrangements will be treated as income, and the strategy can no longer be employed to scale back the total level of income to qualify for super co-contribution. The measure is therefore likely to have the greatest negative effect on middle class income earners, according to Midwinter Financial Services. Ipac Securities notes the current system penalises the self-employed, who cannot use the reduction approach in this manner. Asteron advises consumers that salary sacrificing is still a worthwhile investment method despite the changes.
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