Australians residing in rural and regional areas will be amongst the hardest hit workers affected by the federal government’s plan to drop the Low Income Super Contribution (LISC), according to Industry Super Australia (ISA).
The May budget confirmed the LISC will be abolished in coming years to leave 3.6 million Australian workers with considerably less in their superannuation accounts.
The LISC rebates up to $500 into the super accounts of working Australians earning less than $37,000 whose marginal tax rate is 15 per cent or less. It was initiated following a recommendation from the independent Australian future tax system report, known as the Henry Review, in 2010.
ISA said scrapping the LISC will have a large impact on 40 per cent of Australia’s rural and regional employees, as 24 of the 25 worst affected electorates by the proposed change are located in regional Australia.
In the worst affected electorates, almost one in two employees will be adversely impacted compared to less than one in five in the least affected metropolitan electorates, ISA said.
The legislation to abolish the LISC has been rejected by the Senate once, but is scheduled to return again after July for the new Senate to reconsider this legislation.
ISA chief executive David Whiteley said retention of the LISC is necessary and it was not sustainable to have a “two-tier” system, with only middle and high income earners attracting a tax break on their super contributions.
“The reality is that until every Australian receives a tax concession on their super contributions, no other changes to the taxation of super will be accepted by the community at large,” Whiteley said.