The superannuation industry is pressuring the Federal Government on tax cuts, with three key groups pushing for action on the high income earners’ surcharge and an extension of co-contribution payments.

Accounting group CPA Australia and the Investment and Financial Services Association (IFSA) want the surcharge removed eventually, while the Association of Superannuation Funds of Australia (ASFA) wants refunds at retirement for people with lower retirement benefits.

CPA Australia wants the 15% surcharge to be reduced and ultimately removed while IFSA proposes to cut the tax on fund earnings from the current 15% to 12% or 13%, which is likely to reduce the tax from 6-7% to 3-4%.

The Federal Government has tried to halve the surcharge from 15% but the move was blocked by the Senate, which agreed to 10%. The surcharge will probably be cut to 7.5% once the Government controls the Senate from July.

IFSA CEO Richard Gilbert came out in support of the abolition of the superannuation surcharge suggested by Administration and Finance Minister Nick Minchin last week.

Mr Gilbert told Sunrise Exchange News the move represents good policy and good economics. “At this time of the economic cycle, tax cuts could well be inflationary and could fuel imports – and the current account deficit would be affected.”

IFSA and CPA Australia also support an ASFA proposal to extend the Government’s co-contributions to people earning up to $60,000 a year. The Government’s co-contribution of $1000 for those contributing $1500 at the low-income end phases out around $58,000.